The ongoing federal government shutdown, which has already led to the furlough of approximately 750,000 federal workers and the suspension of pay for many others, is projected to cost the U.S. economy between $7 billion and $14 billion, according to a new report from the nonpartisan Congressional Budget Office (CBO). The report, commissioned by House Budget Chair Jodey Arrington (R-Texas), outlines the economic consequences if the shutdown persists for four weeks, six weeks, or two months. While the CBO forecasts that economic growth will return to normal by 2026, the loss of GDP from furloughs may not be entirely recoverable. The permanent GDP losses could range from $7 billion, if the shutdown ends immediately, to $14 billion, should the shutdown persist for an additional month.
In addition to the direct economic toll, the shutdown is expected to exacerbate the strain on government services and public assistance programs. The CBO also notes that real GDP will be anywhere from 1 to 2 percentage points lower in the fourth quarter of 2025 than it would have been if the government remained open. The report highlights that the economic effects of the shutdown are uncertain and depend on decisions made by the Administration during the shutdown. CBO Director Phillip Swagel emphasized in the report that “the effects of the shutdown on the economy are uncertain. Those effects depend on decisions made by the Administration throughout the shutdown.”
The situation is further complicated by the decision by the Department of Agriculture to stop providing emergency funds to sustain the Supplemental Nutrition Assistance Program (SNAP) during the shutdown. This decision means that SNAP benefits, which provide food aid to millions of low-income Americans, will be suspended starting November 1. This move has already sparked legal challenges from Democratic leaders of over 25 states, who argue that the government has a duty to ensure continued access to essential services during a shutdown. The halt in SNAP disbursements adds another layer of financial strain on households, particularly those already struggling with rising living costs and limited income.
Despite the severe economic consequences, political negotiations to resolve the shutdown remain inconclusive. Senate Majority Leader John Thune has acknowledged that “talks to end the shutdown have picked up” but has not provided a timeline for resolving the impasse. The prolonged shutdown not only undermines economic stability but also raises concerns about the long-term viability of government operations and the ability of public agencies to fulfill their mandates. With the potential for further financial setbacks and disruptions to essential services, the economic impact of the shutdown continues to be a major point of contention among policymakers and economists alike.