(MENAFN) The US government shutdown is causing “far worse” economic damage than previously anticipated and may reduce fourth-quarter GDP growth by half, White House economic adviser Kevin Hassett has cautioned.

The 38-day closure, now the longest in US history, is severely affecting the travel, hotel, and construction industries, Hassett told Fox Business in an interview on Friday.

“The impact on the economy is far worse than we expected because it’s gone on for so long,” he added.

According to Hassett, the shutdown could trim 1% to 1.5% off US GDP growth for the October-December quarter, referencing recent forecasts from Goldman Sachs.

“We were going to have at least 3% growth in the fourth quarter… now we’re expecting something like half that,” he noted.

Hassett also highlighted that “travel and leisure is a place that’s really being heavily hit right now,” warning that if the shutdown continues to disrupt air travel workers’ pay for “another week or two,” the industry could experience “a near-term downturn.”

US airlines canceled roughly 700 flights at 40 major airports on Friday, following reductions recently announced by the Federal Aviation Administration (FAA), multiple sources have reported.

Due to shortages of air traffic controllers caused by the shutdown, the FAA mandated a 4% reduction in flights on Friday.

These cuts are expected to increase gradually to 10% by the same day next week if the shutdown persists, according to the FAA’s emergency order.

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