Congressional Budget Office Estimates Government Shutdown Has Cost the U.S. Economy $18 Billion

On Wednesday, the Congressional Budget Office released an updated assessment estimating that this year’s federal government shutdown has already imposed at least $18 billion in economic losses, of which between $7 billion and $14 billion may be permanent depending on the shutdown’s eventual duration.

The CBO projects that if the shutdown persists into a sixth week, roughly by mid‑November, fourth‑quarter real GDP growth will be approximately 1.5 percentage points below what would otherwise be expected, equivalent to an output shortfall of about $28 billion. Should the shutdown extend to eight weeks, near the Thanksgiving period, the estimated adverse impact on real GDP would rise to roughly two percentage points, or about $39 billion.

The analysis attributes the slowdown in overall economic activity to several channels, including a reduction in services delivered by federal personnel, diminished private‑sector output stemming from interruptions to government contracts, and a decline in government expenditures on goods, services and food assistance.

The CBO further noted that roughly 650,000 federal employees are currently furloughed without pay. Were all of those workers to be classified as temporarily unemployed, the unemployment rate for October could increase by about 0.4 percentage points, representing the largest single‑month rise since the onset of the COVID‑19 pandemic. The agency emphasized that most of the measured effects are transitory and indicated that some rebound in growth could occur in the first quarter of next year.