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The toll of the 41-day government shutdown (and counting) on the US economy will take a while to determine. Much of the estimated $15 billion a week in lost activity will be recouped as federal workers start collecting paychecks, welfare payments are restored, and travelers can confidently book holiday tickets. “We kind of need a functioning government to have a functioning economy,” economist Paul Krugman told Bloomberg. “This was [long] enough to show us.”
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Government shutdowns tend to be nonevents, economically: The longest on record, in 2018, shaved $3 billion off a then-$21 trillion economy, according to the Congressional Budget Office. Its latest estimate here is up to $14 billion in lost growth. But this standoff took a toll on consumer sentiment, which is at its lowest level since June 2022. And the political disagreement that ignited it — steep rises in health insurance premiums that will kick in next year — will squeeze Americans already pulling back. While spending that was delayed will likely show up in the first quarter of 2026, the Federal Reserve will have to take that on faith when it decides next month whether to keep cutting interest rates.