WASHINGTON (AP) — The long-awaited conclusion of the longest government shutdown in U.S. history is on the horizon, yet the economic repercussions are already being felt by many.
Approximately 1.25 million federal employees have faced financial strain since October 1, missing paychecks and dealing with disrupted services. Thousands of flights have been scrapped due to an overburdened air traffic control system—a trend expected to persist into the coming week, despite looming government re-opening efforts.
The Congressional Budget Office (CBO) has predicted that the shutdown will cut fourth-quarter growth by up to 1.5 percentage points, significantly constraining economic performance. However, once the government resumes operations, federal workers will receive back pay, promising some recovery in lost economic activity. Still, lingering effects remain including unfulfilled travel plans and unmade restaurant visits as a result of canceled flights.
“Short-lived shutdowns typically leave little trace in data, but the current one is different due to its unprecedented length and the growing disruptions to welfare services and travel,” said Gregory Daco, chief economist at EY.
As the government closure exacerbates existing economic challenges such as sluggish hiring rates and sustained inflation levels, experts are refraining from projecting a recession at this time. Approximately 650,000 federal workers have been idled during this shutdown, leading to a predicted 0.4 percentage point hike in the unemployment rate.
In total, federal personnel are projected to lose nearly $16 billion in wages by mid-November, further curbing personal expenditure at stores and restaurants. Compounded with the ongoing delays in SNAP (food assistance) benefits—a critical source of aid for approximately 42 million individuals—consumer spending and sentiment have taken a hit.
The frustration within the travel industry continues as over 5,500 flights have been canceled so far, with analysts from Tourism Economics estimating a staggering $2.6 billion loss in travel-related revenue over the shutdown period.
In conclusion, while there may be efforts in Congress to potentially expedite reopening with full funding for SNAP benefits, the shutdown's repercussions signal a challenging road ahead for both individuals and the economy at large.
