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Speaker of the House Mike Johnson, R-La., and GOP leaders, from left, Rep. Lisa McClain, R-Mich., Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., blame the government shutdown on Democrats during a news conference at the Capitol in Washington, Thursday, Oct. 2, 2025. (AP Photo\/J. Scott Applewhite)<\/p>\n
Speaker of the House Mike Johnson, R-La., and GOP leaders, from left, Rep. Lisa McClain, R-Mich., Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., blame the government shutdown on Democrats during a news conference at the Capitol in Washington, Thursday, Oct. 2, 2025. (AP Photo\/J. Scott Applewhite)<\/p>\n
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The U.S. government has now shut down 21 times in the past half century<\/a>. The last of those shutdowns was the longest \u2014 stretching five weeks in December 2018 into January 2019 during Trump\u2019s first term.<\/p>\n Even that one barely left a mark on the world\u2019s biggest economy: The Congressional Budget Office estimates that it shaved just 0.02%<\/a> off 2019 U.S. gross domestic product \u2014 the nation\u2019s output of goods and services.<\/p>\n The economic impact of shutdowns is usually fleeting. Federal workers get furloughed and the federal government delays some spending while they last. When they\u2019re over, federal workers go back to their jobs and collect back pay, and the government belatedly spends the money it had withheld. It\u2019s pretty much a wash.<\/p>\n \u201cGovernment shutdowns are inconvenient and messy,\u2033 said Scott Helfstein, head of investment strategy at the investment firm Global X. \u201dBut there is little evidence that they have a significant impact on the economy. Typically, the lost economic activity, if meaningful in the first place, is recovered in the following quarter.\u2033<\/p>\n Government benefit payments that provide crucial income support for millions of Americans, such as Social Security, and health care programs such as Medicare, won\u2019t be disrupted by the shutdown.<\/p>\n Data from previous shutdowns have shown little impact on U.S. GDP unless they are extended, according to CBO Director Phillip Swagel. \u201cThe impact is not immediate, but over time, there is a negative impact of a shutdown on the economy,\u201d he recently told The Associated Press.<\/p>\n The damage could be worse this go-around.<\/p>\n <\/p>\n John O\u2019Hara works on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo\/Seth Wenig)<\/p>\n John O\u2019Hara works on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo\/Seth Wenig)<\/p>\n Read More<\/p>\n First, some government agencies dodged the 2018-2019 shutdown because they\u2019d received funding in advance and could just continue operating. That hasn\u2019t happened this time: The CBO estimates that about 750,000 federal employees could be temporarily laid off. <\/p>\n Trump is also considering something more destructive: His budget office has threatened the mass firing of federal workers this time, not just putting them on temporary furlough. <\/p>\n A \u201creduction in force\u2019\u2019 would not only lay off employees but eliminate their positions, threatening more upheaval for a workforce that\u2019s already been purged by Trump.<\/a> \u201cWe\u2019d be laying off a lot of people that are going to be very affected, and they\u2019re Democrats. They\u2019re going to be Democrats,\u201d the president said Tuesday.<\/p>\n Thomas Ryan of Capital Economics wrote in a commentary that \u201cit is reasonable to assume that (Trump\u2019s mass layoff threat) is political bluster, aimed at pressuring Democrats to approve a funding extension without concessions.\u201d But, he added, \u201cif followed through, it could have longer-term consequences, prolonging government downsizing and keeping the sector as a drag on payrolls into next year.\u201d<\/p>\n Ryan Sweet, chief U.S. economist at Oxford Economics, estimates that the shutdown and temporary loss of income for federal workers could shave 0.1 to 0.2 percentage points from the nation\u2019s annual growth rate in the fourth quarter for each week the government is closed. Some of that will be recovered once it reopens. <\/p>\n \u201cThe economic costs of government shutdowns are normally minimal unless they last for several weeks,\u201d Sweet wrote.<\/p>\n The showdown also comes at a time when the job market is already under strain, damaged by the lingering effects of high interest rates and uncertainty around Trump\u2019s erratic campaign to slap taxes on imports from almost every country on earth and on specific products \u2014 from copper to foreign films<\/a>.<\/p>\n <\/p>\n Financial information is displayed as traders work on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo\/Seth Wenig)<\/p>\n Financial information is displayed as traders work on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo\/Seth Wenig)<\/p>\n Read More<\/p>\n Labor Department revisions earlier this month showed that the economy created 911,000 fewer jobs<\/a> than originally reported in the year that ended in March. That meant that employers added an average of fewer than 71,000 new jobs a month over that period, not the 147,000 first reported. Since March, job creation has slowed even more \u2014 to an average 53,000 a month. During the 2021-2023 hiring boom that followed COVID-19 lockdowns, by contrast, the economy was creating 400,000 jobs a month.<\/p>\n<\/p>\n
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