The ongoing U.S. government shutdown is starting to take a toll on the economy as Republicans and Democrats remain deadlocked over federal funding. The longer it drags on, the more it could hurt economic growth — though experts say much of the damage can be reversed once the government reopens.
Economists estimate that every week the shutdown continues could knock 0.1% to 0.2% off annual GDP growth, after adjusting for inflation. That might sound small, but if this goes on much longer, the effects will start to pile up.
The biggest hit comes from consumer spending and the loss of productivity among hundreds of thousands of federal employees. More than 700,000 government workers have been furloughed, while about the same number are working without pay. For many families, that means putting off major purchases and tightening budgets just to get by.
The White House has said that all federal employees will eventually receive back pay once operations resume. Still, that’s little comfort for people struggling to pay bills right now. The Trump administration has also laid off some workers who were already on temporary furlough, making the situation even more difficult.
Meanwhile, government contractors—who don’t usually get back pay—have been told to stay home without pay, creating another wave of financial strain.
“There will be an impact on the economy,” said Gregory Daco, chief economist at EY Parthenon. “It won’t cause a recession, but the longer it lasts, the more permanent some losses could be — especially for workers who’ve had to cut back spending or dip into savings.”
Unlike past shutdowns, where certain departments stayed funded, this one is affecting nearly every branch of the federal government. Even though military personnel were paid last week, reports suggest some service members haven’t received their full salaries.
The shutdown’s effects are also spreading to state programs. States like New York and Texas have warned that food stamp payments — which help millions of low-income families — could stop if the shutdown continues through November.
In Pennsylvania, officials have already announced a suspension of food stamp payments as of October 16.
Economists warn that if this continues much longer, the impact will go beyond government paychecks — it could ripple through local economies, reduce consumer confidence, and slow the nation’s recovery just as it was starting to gain strength.
