The ongoing U.S. government shutdown is currently causing losses of approximately $7 billion each month, according to a recent report from the Congressional Budget Office (CBO). This severe economic impact began when the shutdown commenced on October 1, and it has now lasted for nearly a month.
Economic Impact of the Government Shutdown
The CBO provided scenarios projecting the decline in real gross domestic product (GDP) based on the duration of the shutdown:
- $7 billion loss in a four-week shutdown
- $11 billion loss in a six-week shutdown
- $14 billion loss in an eight-week shutdown
According to the report, even though GDP may temporarily spike after the government reopens, a considerable portion of the losses will remain unrecovered. Specifically, the CBO estimates that between $7 billion and $14 billion (adjusted to 2025 dollars) will not return to the economy.
Workforce and Spending Declines
Government shutdowns often lead to a decrease in spending on goods and services. During this period, over a million federal workers are without pay, which contributes to the economic downturn. However, spending is expected to rebound once the government resumes operations.
The analysis indicates there will be negative macroeconomic consequences linked to the shutdown. These effects will grow more serious as the shutdown continues. CBO’s analysis estimates that around 600,000 employees will remain active during the shutdown, while approximately 650,000 will be furloughed each week.
Federal Employee Payments
While many federal employees are not currently receiving paychecks, the CBO notes that military and certain law enforcement personnel have been compensated through reallocated funds. Once the government resumes operations, all federal workers will receive back pay, regardless of their work status during the shutdown.
The implications of this shutdown extend beyond finances, affecting federal employees, beneficiaries of federal services, and the broader public. El-Balad encourages individuals impacted by the shutdown to share their experiences and feelings regarding the closure.
