What are the effects of a government shutdown?

        

A government shutdown occurs when Congress fails to pass appropriations bills to fund federal agencies. The most recent shutdown, which began on October 1, 2025, and ended on November 12, 2025, was the longest in U.S. history at 43 days. 

The following sections detail the effects of a government shutdown based on historical data and the recent 2025 impasse. 

1. Economic and Financial Impact

Shutdowns cause significant, often permanent, economic losses due to delayed spending and halted services. 

• GDP Losses: The Congressional Budget Office (CBO) estimated that the 2025 shutdown resulted in a permanent loss of $11 billion to $14 billion in real GDP.
• Consumer Sentiment: Prolonged shutdowns severely damage consumer confidence; in November 2025, consumer sentiment reached its lowest level since 2022.
• Small Businesses: The Small Business Administration (SBA) stops processing new loans (such as 7(a) and 504 programs), which can cost small businesses roughly $1 billion per month in lost capital.
• Travel Industry: Shutdowns lead to widespread flight cancellations and reduced travel spending, costing the industry an estimated $63 million per day. 

2. Impact on the Federal Workforce

Federal employees are categorized into those who are furloughed (unpaid and not working) and those who are "excepted" (working without immediate pay). 

• Paychecks: Over 1.4 million federal workers were affected in 2025, with nearly 3 million paychecks withheld, totaling approximately $14 billion in missing wages by mid-November.
• Back Pay: While the Government Employee Fair Treatment Act of 2019 guarantees back pay for direct federal employees, government contractors are generally not guaranteed reimbursement.
• Brain Drain: Surveys indicate that shutdowns severely demoralize employees, equivalent to a 10% salary cut in morale, leading to a "brain drain" as skilled workers leave for the private sector. 

3. Public Health and Safety Services

Essential services related to national security and public safety continue, but often with disruptions. 

• Nutrition Assistance: Funding for WIC (Women, Infants, and Children) can run out quickly. SNAP (food stamps) benefits were disrupted for 42 million Americans during the 2025 shutdown after the first month.
• Food and Environmental Safety: The FDA and EPA typically suspend routine inspections of food facilities, hazardous waste sites, and drinking water systems, increasing public health risks.
• Air Travel: Air traffic controllers and TSA agents are required to work without pay, which leads to staffing shortages, longer wait times, and flight cancellations. 

4. Unaffected Services

Certain programs are funded through mandatory spending or permanent appropriations and continue mostly as normal: 

• Social Security & Medicare: Benefit checks are still issued, though administrative services like card replacement or benefit verification may be delayed.
• U.S. Postal Service: The USPS is self-funded and is not affected by a shutdown.
• VA Medical Facilities: All VA clinics and hospitals remain operational.
• Passports: Consular and passport services usually continue as they are primarily funded by processing fees.