The U.S. economy remains largely unscathed by the government shutdown, but the nation could risk economic peril if the impasse deepens into a long-term standoff, some economists told ABC News.
Roughly 750,000 furloughed government workers already feel crimped by the shutdown as they suffer missed paychecks and strained budgets. Those direct effects will grow dramatically on Nov. 1, when millions of low-income Americans are set to lose access to critical food assistance.
A prolonged shutdown lasting several months or longer may force furloughed employees to exhaust savings, while sapping wider consumer strength as a swathe of people go without key government support, economists said. The absence of gold-standard economic data typically issued by the federal government could also foster uncertainty, diminishing confidence among businesses and policymakers, they added.
The threat of mounting risk comes as a hiring slowdown stokes recession fears and inflation proves difficult to fully contain.
“We’re gradually reaching a point where the shutdown becomes something more significant,” Gregory Daco, chief economist at accounting firm EY, told ABC News, warning of a “vicious cycle” in which a lingering shutdown clouds the economic outlook and chills economic activity.
“A government shutdown would be an additional headwind that could further weaken the underlying foundation of the U.S. economy,” Daco added.
But at least one economist downplayed the extent of the economic threat posed by a government shutdown, even if it stretches on for months.
“Shutdowns involve extremely little money because most federal spending is on autopilot,” Jeffrey Campbell, an economics professor at Notre Dame University and a former senior economist at the Federal Reserve Bank of Chicago, told ABC News.
A prolonged shutdown could add another entry to the nation’s list of economic ills, but it would likely have few “spillover effects,” since the fallout would be limited to a relatively narrow sliver of the economy, Campbell added.
Each week of a potential government shutdown would reduce annualized real gross domestic product (GDP) growth in the quarter by about 0.1%, which amounts to about $30 billion, Mark Zandi, chief economist at Moody’s Analytics, told ABC News in a statement.
For reference, the economy grew by an average annualized rate of 1.6% over the first half of 2025, meaning it would take a prolonged shutdown for substantial damage to be incurred.
If the shutdown were to continue for the remainder of 2025, it could reduce annualized GDP by as much as 2% in the current quarter, potentially resulting in an economic contraction over the three-month period, Daco said.
Sentiment among investors and consumers could sour as uncertainty looms over the economy, some economists warned, noting a feedback loop as participants brace for further pain and the ensuing pullback triggers sluggish economic performance.
“If it extends into the holiday shopping season between Thanksgiving and Christmas, a recession will become a real threat as it will weigh on already fragile consumer, business and investor confidence,” Zandi said.
Still, some economists voiced skepticism about the possibility the government shutdown could derail the U.S. economy, which has proven resilient in the face of elevated inflation, far-reaching tariffs and burdensome interest rates.
Though hiring has slowed, the nation’s unemployment rate still hovers at a historically low level. Inflation has ticked up in recent months, but it remains far below a pandemic-era peak.
“When you’re in a pretty good place, getting shoved a little bit away from it is not so bad,” Campbell said. “If we were in a bad situation and making it worse, then this would be a lot more costly.”
A pause in government-issued economic data during the shutdown has made it more difficult to assess the health of the U.S. economy, however, economists noted.
The U.S. Bureau of Labor Statistics is set to release inflation data on Friday, but the measure will arrive more than a week behind schedule. Earlier this month, the agency postponed publication of a closely watched jobs report without scheduling an alternative release date.
Policymakers and business leaders can still avail themselves of private sector data sources, but a loss of some federal data will make it more difficult for them to act with the type of confidence that would bolster the economy, Daco said.
“The lack of data adds uncertainty to an already uncertain underlying economy,” Daco said.
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