The U.S. economy is currently weathering the effects of a government shutdown, but experts warn that prolonged inaction could lead to significant economic challenges. Approximately 750,000 government workers are facing financial strain due to missed paychecks. The situation is expected to worsen on November 1, when millions of low-income Americans may lose access to essential food assistance programs.

Economists caution that a lengthy shutdown could force furloughed employees to deplete their savings, which would weaken consumer spending. This could have broader implications for the economy, as many individuals rely on government support. The lack of critical economic data typically provided by the federal government could also create uncertainty, impacting confidence among businesses and policymakers.

Gregory Daco, chief economist at EY, expressed concern about the potential for a “vicious cycle” where a prolonged shutdown clouds the economic outlook and dampens activity. He stated, "A government shutdown would be an additional headwind that could further weaken the underlying foundation of the U.S. economy."

Conversely, some economists believe the economic impact of a shutdown may be limited. Jeffrey Campbell, an economics professor at Notre Dame University, noted that most federal spending operates on autopilot, suggesting that shutdowns involve minimal financial disruption. He added that while a prolonged shutdown could contribute to economic challenges, it would likely have few spillover effects beyond a narrow segment of the economy.

Mark Zandi, chief economist at Moody's Analytics, estimated that each week of a shutdown could reduce annualized real GDP growth by about 0.1%, equating to roughly $30 billion. He pointed out that the economy grew at an average annualized rate of 1.6% in the first half of 2025, indicating that substantial damage would require an extended shutdown.

If the shutdown persists through the end of 2025, it could potentially lower annualized GDP by as much as 2% in the current quarter, possibly leading to an economic contraction, according to Daco. Economists warn that investor and consumer sentiment could decline as uncertainty increases, creating a feedback loop that may further hinder economic performance. Zandi noted that if the shutdown extends into the holiday shopping season, it could pose a real threat of recession, impacting consumer and business confidence.

Despite these concerns, some economists remain skeptical about the shutdown's ability to derail the resilient U.S. economy. The unemployment rate remains historically low, and while inflation has risen recently, it is still significantly lower than during the pandemic peak. Campbell remarked, "When you're in a pretty good place, getting shoved a little bit away from it is not so bad. If we were in a bad situation and making it worse, then this would be a lot more costly."

The shutdown has also disrupted the release of government economic data, complicating assessments of the economy's health. The U.S. Bureau of Labor Statistics is expected to release inflation data soon, but it will be delayed. Earlier this month, the agency postponed a key jobs report without providing a new release date. While private sector data sources remain available, the absence of federal data adds to the uncertainty in an already unpredictable economic landscape, according to Daco. He stated, "The lack of data adds uncertainty to an already uncertain underlying economy."