The short-term shutdown has limited economic effects, but could leave a more lasting impact due to its record length. The Congressional Budget Office recently estimated that approximately US$11 billion of economic activity could be permanently lost.
Shutdown has increased economic challenges
The shutdown has exacerbated economic challenges such as sluggish hiring and persistently elevated inflation. The uncertainty around the release of October jobs and consumer price index data adds to the uncertainty at a time when the Federal Reserve is already facing a disputed interest rate decision next month.
Time will be required to resolve operational disruptions. The restrictions are expected to continue for the next several days at major airports after overworked air traffic controllers canceled flights due to unpaid pay cheques. Some passengers may not be able to rebook their flights, which represents permanently lost business.
The 42 million low-income Americans enrolled in food assistance may need several days to receive delayed benefits. Some missed restaurant meals may not be made up as people give up rather than postpone purchases selectively – especially larger purchases. The cost of Obamacare is still unresolved, putting many families at risk entering 2026.
Record shutdown exemplifies governance challenges
Beyond its ultimately moderate macroeconomic impacts, the record shutdown exemplifies the growing political polarization and governance challenges facing the US. Scope last month downgraded its US sovereign rating to AA- from AA, citing governance challenges.
For a look at all of today’s economic events, check out our economic calendar.
