‘The effects of the shutdown on the economy are uncertain,’ the nonpartisan budget watchdog said in the report.
The government shutdown could cost the U.S. economy up to $14 billion, a new analysis said on Oct. 29.
The nonpartisan Congressional Budget Office, writing in a letter to House Budget Committee Chairman Jodey Arrington (R-Texas), estimated the economic impact of the government shutdown, now in its 29th day.
Real (non-inflation-adjusted) gross domestic product will be lower in the fourth quarter than it would have been without the closure, the budget watchdog said.
Depending on the length of the shutdown, the annualized real GDP growth rate will be reduced by 1 to 2 percentage points.
While most of the decline will be recovered, the Congressional Budget Office estimates that between $7 billion and $14 billion will not be recovered.
“The effects of the shutdown on the economy are uncertain. Those effects depend on decisions made by the administration throughout the shutdown. In addition, how federal employees and contractors respond to the delay in compensation is uncertain,” the letter stated.
Federal outlays are expected to fall by $33 billion if the shutdown ends this week. That figure rises to $54 billion if the impasse lasts six weeks, and to $74 billion if it continues through late November.
The estimates are mainly due to delayed spending for Supplemental Nutrition Assistance Program benefits, postponed compensation for approximately 650,000 furloughed employees, and paused contracts and advisory services.
“Economic activity at the end of 2025 will be lower as a result of the shutdown,” the Congressional Budget Office said.
“Real GDP will rebound when federal funding resumes, with most of the forgone output made up in the future.”
By the first quarter of 2026, real GDP growth will rebound by as much as 3.1 percentage points after federal funding resumes. The following quarter is also forecast to remain positive.
Under all three shutdown scenarios—four weeks, six weeks, and eight weeks—economic activity will return to what it would have been without the shutdown after 2026.
Arrington urged his Democratic colleagues to reopen the government.
“Democrats are playing politics, and the American people are paying the price,” he said in an Oct. 29 news release.
“Even the independent, nonpartisan Congressional Budget Office confirmed the economy will lose 1 percent in growth because of the Schumer shutdown.
“For hardworking families, that means higher unemployment, lower wages, and less money in their pockets.”
By Andrew Moran and Nathan Worcester
