Impact of Longest U.S. Government Shutdown on Economy

Tue Nov 11 2025 10:59:50 GMT+0200 (Eastern European Standard Time)

The protracted federal government shutdown is nearing an end, but its repercussions are significantly affecting the U.S. economy, impacting millions of federal workers, travel disruptions, and consumer sentiment.

The ongoing federal government shutdown has become the longest in U.S. history, impacting approximately 1.25 million federal workers who have not been paid since October 1. The Congressional Budget Office estimates a decline in fourth-quarter economic growth, with lost wages and reduced consumer spending contributing to a substantial economic downturn. This article explores the far-reaching effects of the shutdown on various sectors.

The longest federal government shutdown in U.S. history appears to be nearing an end, but it is leaving a significant mark on an already-struggling economy.

About 1.25 million federal workers haven’t been paid since October 1, resulting in thousands of flight cancellations. This trend is expected to continue even as Congress moves toward reopening the government. Additionally, government contract awards have slowed, and some food aid recipients have seen their benefits interrupted.

Most economic activity lost during the shutdown is expected to be recovered once the government reopens, but some canceled flights and missed restaurant meals will not be regained. “Short-lived shutdowns typically have negligible data effects, but this prolonged situation will leave lasting effects,” stated Gregory Daco, chief economist at EY.

The Congressional Budget Office (CBO) estimates that a six-week shutdown could reduce fourth-quarter growth by about 1.5 percentage points, roughly halving growth from the previous quarter. Although reopening may boost first-quarter growth next year by 2.2 percentage points, about $11 billion in economic activity will be permanently lost.

Statistics indicate that about 650,000 federal workers didn’t work during the shutdown, which may increase the unemployment rate from 4.3% to approximately 4.7% in October. This setback directly impacts the economy, as federal employees make up significant portions of the workforce in states like Maryland and New Mexico.

Effects on Federal Spending and Services

The shutdown has deteriorated consumer sentiment, with many Americans changing their spending habits, delaying large purchases, and affecting overall economic growth. Federal spending cuts have also delayed about $800 million in contracts daily.

Airline industries reported flight cancellations and low travel spending due to the shutdown, while consumer sentiment plummeted amid worries regarding personal finances.

SNAP Benefits and Economic Recovery

Delays in the Supplemental Nutrition Assistance Program (SNAP), affecting 42 million recipients, have raised concerns about food security among the nation’s most vulnerable citizens. Measures are under consideration in Congress to restore full SNAP benefits once the government reopens.

Despite these challenges, economists are cautiously optimistic about a potential recovery as the government prepares to resume normal operations. Key decisions made by the Federal Reserve regarding interest rates will also hinge on economic data shortly after the reopening.