Federal shutdown could cost U.S. economy up to $14 billion

The non-partisan Congressional Budget Office (CBO) has estimated that the ongoing U.S. federal government shutdown could reduce the economy by between $7 billion and $14 billion, shaving up to 2 percent off fourth-quarter gross domestic product, the agency said Wednesday.

The partial shutdown entered its 29th day on Wednesday, with no resolution yet in sight, as a stalemate continues between congressional Republicans and Democrats. Senate Republicans are urging Democrats to back a stop-gap funding measure to keep federal agencies operational through November 21. Meanwhile, Democrats have insisted on negotiations to extend expiring federal tax credits that help Americans purchase private insurance under the Affordable Care Act.

According to the CBO analysis, the economic damage stems from delayed federal spending on employee compensation, goods and services, and food-stamp benefits for low-income Americans. While much of the decline in real GDP is expected to be recovered once spending resumes, Director Phillip Swagel warned that a portion will be permanently lost.

“Although most of the decline in real GDP will be recovered eventually, CBO estimates that between $7 billion and $14 billion will not be,” Swagel wrote in an October 29 letter to House Budget Committee Chairman Jodey Arrington (R-Texas).

The CBO outlined scenario-based estimates for the shutdown’s duration and cost:

If the shutdown ends this week, the economy would lose roughly $7 billion.

A six-week shutdown (through November 12) would raise the loss to about $11 billion.

An eight-week shutdown (through November 26) could cost about $14 billion.

By one count, approximately 750,000 federal workers have been furloughed since funding expired on October 1, the start of the 2026 fiscal year. The Donald Trump administration has directed that U.S. troops, federal law-enforcement agents and immigration officers receive pay; other federal employees have either been furloughed or continue to work unpaid.

“The effects of the shutdown on the economy are uncertain. Those effects depend on decisions made by the administration throughout the shutdown,” Swagel added.

Analysts noted that while government spending is resumed later, the hours of lost work and delayed purchases can lower potential output permanently. The risk is higher the longer the impasse continues, given the broader ripple effects — from federal contractors missing payments, to lower consumer spending in communities dependent on federal employment and services.

With the deadline for a funding bill still under negotiation and no resolution immediately visible, the economic stakes continue to rise — and the window for minimizing permanent damage may be narrowing.

The shutdown may trim up to 2% from Q4 GDP. A portion of lost economic output is permanent, not just deferred. The standoff hinges on funding legislation, stop-gap measures and health-care tax-credit negotiations.

Extended duration means mounting economic risk beyond the immediate federal workforce.

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