US: Another shutdown could cause significant disruptions to the tax filing season - Wells Fargo

Analysts at Wells Fargo, estimate that the shutdown will directly reduce real GDP growth in Q1-2019. Their biggest concern remains the possibility of significant disruptions to the tax filing season.

Key Quotes: 

“Based off of what has already transpired, we estimate that the shutdown will directly reduce real GDP growth in Q1-2019 by about 0.3 percentage points, with a rebound of a similar magnitude likely in Q2. Should the government once again shut down after February 15 for another extended period of time, this estimate would likely climb higher.”

“If another extended partial government shutdown should take place after February 15, the direct hit to real GDP growth for the quarter would once again start rising. However, as we have discussed, the nature of this particular funding dispute is such that the week-to-week direct growth disruption is relatively small.”

“Our biggest concern remains the possibility of significant disruptions to the tax filing season, which typically begins in late January and peaks over the following few months.”

“The possible indirect damage from the shutdown is far more difficult to quantify, but we continue to be most concerned about possible disruptions to the tax filing season. Tax refunds amounted to about $200 billion in February and March 2018, and the combination of the tax law changes, the shutdown and the temporary CR could lead to disruptions in tax filings, and, by extension, consumer spending, at least in the near term.”