Government Shutdown Costs U.S. Economy Billions per Week, Longest in History

As the government shutdown enters its fifth week, the U.S. economy is facing the potential loss of 0.1 to 0.2 percentage points of annual growth in economic output, translating to $7.6 billion to $15.2 billion per week in lost output. This estimate is based on the hours that government employees are not working, according to Oxford Economics. The longest government shutdown in U.S. history, which occurred during President Trump's first term in 2018, had a slightly smaller impact on annual growth, cutting off about 0.1 percentage points per week. In contrast, the current shutdown is more expensive due to the lack of appropriations bills passed by Congress to keep the government funded and running. The White House's plan to continue laying off federal employees as part of President Trump's government reorganization campaign further exacerbates the loss of commerce supported by these jobs.

Key Takeaways:

• The government shutdown is costing the U.S. economy between $7.6 billion and $15.2 billion per week, with 0.1 to 0.2 percentage points of annual growth in economic output at risk.
• The longest government shutdown in U.S. history, which took place during President Trump's first term in 2018, cut slightly less than 0.1 percentage points off annual growth per week.
• Tens of millions of people are at risk of losing access to food stamps due to the shutdown, with the Supplemental Nutrition Assistance Program (SNAP) not being funded past October 31.
• The shutdown has delayed the release of economic data, including the monthly jobs report and consumer price inflation report, which may impact monetary policymakers' ability to make informed decisions.
• The administration's aggressive tariff and immigration policies have contributed to the economic resilience of the U.S. economy despite the shutdown.