Washington. The longest federal government shutdown in US history appears to be nearing an end, but not without leaving a mark on an economy already under strain.

About 1.25 million federal workers haven’t been paid since Oct. 1. Thousands of flights have been canceled, a trend expected to continue this week even as Congress moves toward reopening the government. Government contract awards have slowed, and some food aid recipients have seen their benefits disrupted.

Most of the lost economic activity will recover once the government reopens, since federal workers will receive back pay. But some canceled flights won’t be retaken, missed restaurant meals won’t be made up, and postponed purchases may never happen.

“Short-lived shutdowns are usually invisible in the data, but this one will leave a lasting mark,” said Gregory Daco, chief economist at accounting firm EY. “Both because of its record length and the growing disruptions to welfare programs and travel.”

The Congressional Budget Office (CBO) estimated that a six-week shutdown would reduce growth in this year’s fourth quarter by about 1.5 percentage points, cutting expansion roughly in half from the third quarter. Reopening should boost first-quarter growth next year by 2.2 percentage points, the CBO projected, but about $11 billion in economic activity will be permanently lost.

The previous record shutdown in 2018–2019 lasted 35 days but only partially closed the government because many agencies had already been funded. That episode trimmed the economy by just 0.02 percent of GDP, according to the CBO.

The current shutdown compounds existing challenges: sluggish hiring, stubbornly high inflation, and the uncertainty caused by President Donald Trump’s tariffs. Still, few economists expect a recession.

Roughly 650,000 federal employees were furloughed, which could lift the unemployment rate by 0.4 percentage points in October, to 4.7 percent from 4.3 percent in August, the last month with available data. Those workers will be counted as employed once the government reopens.

Interest Rate Cuts

The shutdown has also disrupted the flow of key economic data, including reports on unemployment, inflation, and retail sales, that the Federal Reserve uses to gauge the economy’s health. Even with the government reopening, some data will remain delayed.

That uncertainty could lead the Fed to hold off on a widely expected third interest rate cut at its Dec. 9–10 meeting.

“What do you do if you’re driving in the fog? You slow down,” Fed Chair Jerome Powell said at a news conference last month.

Powell said policymakers are divided over whether to reduce rates again, given the unusually cloudy outlook. The government has missed two monthly jobs reports, and October inflation data, scheduled for release Thursday, will likely never be published.

A pause in rate cuts could discourage borrowing and spending, adding to the economy’s headwinds in the months ahead.

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