WASHINGTON, D.C. — November 10, 2025 — As the longest federal shutdown in U.S. history nears its end, economists warn of lasting damage to national growth, employment, and consumer confidence, even as lawmakers finalize a deal to restore government operations.
Record-Breaking Shutdown Disrupts Millions of Workers
Roughly 1.25 million federal employees went without pay for more than six weeks, while another 5 million contractors faced halted projects and no guarantee of compensation.
The Congressional Budget Office (CBO) estimates that missed paychecks will total $16 billion, causing a short-term decline in household spending and regional business activity.
The CBO projects that the shutdown will reduce fourth-quarter growth by 1.5 percentage points, while approximately $11 billion in total output will be permanently lost despite future back-pay reimbursements.
Travel Sector Suffers Major Disruptions
Airlines canceled over 7,500 flights since Friday after the Federal Aviation Administration (FAA) ordered a nationwide 4 percent reduction in air traffic to ease pressure on unpaid controllers.
The cancellations cost the U.S. travel industry $63 million per day, translating to $2.6 billion in lost revenue across airlines, hotels, and restaurants during the six-week closure.
“Each day of halted operations compounds costs that cannot be recovered,” said Bernard Yaros, an economist at Oxford Economics.
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Federal Spending Freeze Slows Contracts and Projects
New government contracts worth nearly $800 million daily were delayed or canceled across agencies including the Department of Defense, NASA, and Homeland Security.
Analysts report that the stalled procurement cycle is likely to delay infrastructure and technology projects through early 2026, constraining public-sector investment and employment growth.
Consumer Confidence Drops to Three-Year Low
The University of Michigan’s consumer sentiment index plunged to 50.4, its lowest level since 2022, as households grappled with uncertainty over income, healthcare, and inflation.
“Short-lived shutdowns are often invisible in data, but this one will leave a mark,” said Gregory Daco, chief economist at EY, citing prolonged welfare disruptions and persistent inflationary fears.
Welfare Programs and SNAP Benefits Disrupted
Payments for the Supplemental Nutrition Assistance Program (SNAP)—affecting 42 million Americans—were delayed by $8 billion, leaving families struggling to buy food.
Although emergency funding is expected in the new deal, analysts note that delayed benefits and administrative backlogs will continue to affect low-income households through year-end.
Interest-Rate Outlook Shifts Amid Data Gaps
The shutdown halted the release of critical economic reports, including inflation and employment data, leaving the Federal Reserve with limited visibility on key indicators.
Fed Chair Jerome Powell said the central bank might delay its next interest-rate cut decision, warning that “the lack of data could cloud the Fed’s ability to respond effectively.”
Regional Impact Concentrated in Washington, D.C. Area
The Washington metropolitan area, already suffering a 6 percent unemployment rate before the shutdown, experienced the sharpest job losses.
Federal workers comprise 5.5 percent of Maryland’s workforce and 3.8 percent in Alaska, highlighting the regional dependence on government spending.
Economic Recovery Will Be Gradual
While back-pay will revive short-term consumption, economists caution that lost travel, dining, and retail sales are unlikely to recover.
“The reopening will lift first-quarter growth by 2.2 percent, but the scars of this record shutdown will linger,” said Yaros.
