U.S. Government Shutdown Could Stretch Into November as Economic Toll Mounts

The ongoing U.S. federal government shutdown is entering its third week with no agreement in sight, raising concerns among economists and policymakers that it could soon become the longest closure in American history.

Analysts say the political standoff in Washington, centered on funding for the Affordable Care Act’s (ACA) insurance subsidies, shows few signs of resolution. “An end to the shutdown requires either White House engagement on a deal or Democrats to cave. As of now, there are no signs of either,” analysts at Beacon Policy Advisors wrote in a note, according to MarketWatch.

The current shutdown, now lasting 20 days, is on track to surpass the record 35-day closure that occurred during Donald Trump’s first term in 2018-2019. Prediction market Kalshi estimated on Friday that the standoff could last about 41 days,roughly until Thanksgiving, compared with initial forecasts of two weeks.

What’s Causing the Stalemate

At the heart of the impasse is disagreement over continuing federal subsidies for ACA health-insurance plans. While open enrollment begins Nov. 1, MarketWatch reports that the subsidies themselves do not expire until Dec. 31, giving lawmakers more time to negotiate.

Other factors could force a breakthrough sooner. Analysts note that airport staffing shortages and missed paychecks among air-traffic controllers and Transportation Security Administration employees could create nationwide travel delays, and political pressure. Chris Krueger of TD Cowen’s Washington Research Group told MarketWatch that “travel and/or ACA premium shocks” could become “potential off-ramps” to end the shutdown, though he believes the “endgame is likely to be a way off — possibly around Thanksgiving.”

Military Pay and Political Pressure

The White House avoided one potential flashpoint last week by ensuring active-duty military members received their Oct. 15 paychecks. MarketWatch cited Wolfe Research analysts who said the administration redirected unused funds from an $8 billion military research account to cover payroll, though the legality of that move has been questioned.

With another payday looming Nov. 1, some had expected renewed pressure to end the shutdown, but analysts at Wolfe Research said they expect the administration “will again find a way to cover their paychecks.”

Polling conducted by MarketWatch on social media showed that 47 percent of respondents named the potential economic impact as their top concern about the shutdown, ahead of travel disruptions (25 percent) and paying furloughed workers (15 percent).

Economic Impact

Economists estimate the shutdown is trimming between 0.1 and 0.2 percentage points off U.S. gross domestic product (GDP) each week it continues, MarketWatch reported. U.S. GDP grew 3.8 percent in the second quarter, according to recent data, meaning the short-term hit may seem small. But the longer the shutdown drags on, the more likely its effects will compound.

The Trump administration has also warned of possible layoffs. More than 4,100 federal layoff notices were issued earlier this month before a judge temporarily blocked the cuts. White House budget director Russ Vought told reporters the total number “will probably end up being north of 10,000.”

In a recent Fox Business Network interview, Trump economic adviser Kevin Hassett said that if the shutdown continues, “the president’s actions to cancel silly government programs the Democrats love and to take them away forever — that is going to ramp up significantly.”

Some analysts remain cautiously optimistic. “If the troops are still getting paid and other payments will go out retroactively once the shutdown ends, we still don’t see much reason to expect big long-term impacts,” Wolfe Research said in its client note quoted by MarketWatch. However, others are less confident. Independent economist Ethan Harris warned that although he does not expect a recession, this shutdown “will have more lasting impacts as it hits an already vulnerable economy.”

What’s Next

With no deal yet in sight, analysts are watching two upcoming dates — Nov. 1, when ACA open enrollment begins and military paychecks are due, and Thanksgiving, the point at which many expect the pressure for a political compromise to peak.

For now, key federal services remain partially closed, many workers are unpaid, and economists say consumer confidence could begin to erode if the stalemate drags on through November.


Your support brings the truth to the world.

Catholic Online News exists because of donors like you. We are 100% funded by people who believe the world deserves real, uncensored news rooted in faith and truth — not corporate agendas. Your gift ensures millions can continue to access the news they can trust — stories that defend life, faith, family, and freedom.

When truth is silenced, your support speaks louder.

Leave a Reply

Your email address will not be published. Required fields are marked *