Federal Government Shutdown Nears End, Leaving Economic Legacy

Tue Nov 11 2025 09:37:12 GMT+0200 (Eastern European Standard Time)

The historic federal government shutdown, which impacted millions of workers and travelers, is on the verge of concluding but has inflicted lasting damage on the economy. Over a million federal employees endured unpaid work, while travel disruptions have contributed to a diminishing consumer outlook.

As the longest federal government shutdown in U.S. history approaches resolution, the aftermath is marked by significant economic ramifications. Approximately 1.25 million federal employees have gone unpaid since October 1, flights have been extensively canceled, and consumer spending is expected to decline. Economic forecasts predict a temporary reduction in quarterly growth, with some losses becoming permanent despite anticipated recovery once the government reopens.

WASHINGTON (RTWNews) — The longest federal government shutdown in U.S. history appears to be nearing an end, but not without leaving a significant mark on an already-struggling economy.

About 1.25 million federal workers haven’t received pay since October 1, and there have been thousands of flight cancellations—a trend that is likely to continue this week despite Congress's moves toward reopening the government. Additionally, delays in government contracts and interruptions to food aid programs have impacted many households.

Most of the lost economic activity should be recuperated as the government reopens, since federal employees will receive back pay. However, certain flight cancellations will not be recuperated, and some missed dining experiences and purchases may never occur at all.

“Short-lived shutdowns usually go unnoticed in data, but this one is leaving a lasting impact due to its unprecedented duration and the increasing disruptions to essential programs and travel,” noted Gregory Daco, chief economist at EY.

The Congressional Budget Office (CBO) estimated that a six-week government shutdown could reduce growth in the fourth quarter by approximately 1.5 percentage points, halving the expected growth from the third quarter. However, a boost in economic activity is predicted for the first quarter of the upcoming year, offset by an estimated $11 billion in irreversible economic losses.

The previous longest shutdown occurred from 2018-2019 and lasted 35 days, partially affecting the economy; it was estimated to have impacted GDP by only about 0.02%. In contrast, this current situation exacerbates existing economic challenges, such as sluggish hiring and high inflation, all within the uncertainty surrounding economic policies.

Approximately 650,000 federal workers were not actively working during the shutdown, causing an increase in the unemployment rate, projected to rise by about 0.4 percentage points. These workers will be considered employed once the government reopens.

Another significant repercussion of the shutdown is the substantial missed paychecks. Federal workers are collectively estimated to have lost around $16 billion in wages by mid-November, leading to reduced consumer spending in various sectors.

Flight disruptions remain a pressing issue, with airlines cancelling over 5,500 flights as part of measures to alleviate the burden on air traffic controllers facing unpaid work. Preliminary estimates indicated that the shutdown may cost the travel industry approximately $2.6 billion.

Consumer sentiment has also taken a hit, closing near a three-year low amid heightened pessimism regarding personal finances and overall business conditions. This decline could adversely affect consumer spending and slow down economic growth.

Furthermore, the shutdown has resulted in restrictions on federal spending, impacting new contracts and the overall flow of federal funds. Significant delays have also occurred in SNAP benefits for millions of Americans who rely on these funds for food assistance.

As the economic fog thickens, the Federal Reserve has found its decision-making complicated by the lack of essential economic data due to the shutdown. This uncertainty may delay expected interest rate cuts, potentially hindering borrowing and spending in the coming months.