The federal shutdown — one month long and counting — has an obvious economic impact for government workers who aren’t receiving paychecks and food aid recipients who could lose their benefits Nov. 1.
But what about the broader economy? History points to some effect there, too.
In past shutdowns, estimates of lost economic activity have reached into the billions of dollars. In the context of a $30 trillion economythat’s not a lot. But on the margins, economists say it can have an effect.
The Congressional Budget Office, Congress’ nonpartisan number cruncher, released an Oct. 29 estimate of how much the economy could lose from a four-week, six-week and eight-week shutdown. The shutdown has already exceeded four weeks; if it continues, Nov. 12 would mark six weeks.
Here’s a look at the agency’s calculations — and some of the count’s possible shortcomings.
What is the current shutdown’s expected economic impact?
The CBO estimate says the federal spending delay will produce short-term economic losses — largely in the fourth quarter of 2025 — that will mostly be recouped during the first quarter of 2026, assuming the shutdown ends by then.
CBO projected how much the shutdown would hamper U.S. economic growth per quarter, adjusted for inflation and multiplied by four, to convert a quarterly figure into an annual one. It estimated that a four-week shutdown would reduce fourth-quarter 2025 growth by 1% and an eight-week shutdown would reduce fourth-quarter growth by 2%.
Most of this lost growth, CBO said, would be made up in the first quarter of 2026 — but not all of it. Between $7 billion and $14 billion would be permanently lost, depending on how long the shutdown lasts.
Much of the permanently lost economic output would stem from furloughed employees’ reduced output, CBO said.
The U.S. Capitol on Sept. 24, 2025. (Louis Jacobson / PolitiFact)
Why might this figure be low?
This estimate could be low because of what CBO assumes when making its calculations.
The agency listed four assumptions in its estimate:
When the shutdown ends, furloughed employees will be paid retroactively.
When funding resumes, “all the spending on goods and services that did not occur during the shutdown will be made up.”
Active-duty military and certain law enforcement will continue to be paid during the shutdown.
When the shutdown ends, missed Supplemental Nutrition Assistance Program benefits will be paid retroactively.
In each of these cases, however, the administration has either proposed doing the opposite or has struggled to accomplish the objective.
On Oct. 7, a week after the shutdown began, President Donald Trump said furloughed federal workers should not necessarily receive back pay once the shutdown is over and that some workers “don’t deserve” it. The White House wrote a legal opinion claiming a 2019 law guaranteeing eventual payment for furloughed workers is not ironclad.
During Trump’s second term, his administration has regularly moved unilaterally to cancel spending approved by Congress. Some of those efforts have been blocked in the courts, but the shutdown has emboldened the administration. One example is its effort to defund the Gateway Tunnel project between New York and New Jersey.
So far, active-duty military personnel have been paid, and they are scheduled to receive their next paychecks Oct. 31. But the administration was able to do this only by shifting $5.3 billion from research and development funding, from a Pentagon procurement account and from an account created under Trump’s One Big Beautiful Bill Act.
The administration is fighting in court efforts to require the use of emergency funding to pay for SNAP benefits, which are otherwise set to expire Nov. 1. It’s unclear whether the administration would reimburse recipients retroactively once the shutdown ends.
Douglas Holtz-Eakin, president of the center-right American Action Forum, said it’s fair to assume that if any or all of CBO’s assumptions ultimately prove incorrect, there could be a substantially bigger hit to the economy than what the agency now projects.
CBO acknowledged in its analysis that “the effects of the shutdown on the economy are uncertain” and depend on “decisions made by the administration throughout the shutdown.”
