The nonpartisan Congressional Budget Office (CBO) said Wednesday that the U.S. economy stands to lose billions in real gross domestic product (GDP) because of the ongoing federal government shutdown.
In a letter to House Budget Committee Chairman Jodey Arrington, R-Texas, CBO Director Phillip Swagel said most of the decline in GDP will eventually be recovered once the shutdown ends; however, between $7 billion and $14 billion will not be.
The CBO also estimated that the government shutdown will reduce annualized real GDP growth in the fourth quarter by 1 to 2 percentage points.
The agency prepared estimates of the shutdown’s effects under four-week, six-week, and eight-week scenarios, according to the letter.
"In all three scenarios that the agency analyzed, the shutdown leads to a temporary economic slowdown," Swagel wrote. "Real GDP is lower in the fourth quarter of 2025 than it otherwise would have been ... The rebound in federal spending for employee compensation, the purchases of goods and services, and SNAP [Supplemental Nutrition Assistance Program] benefits that occurs after the shutdown ends reverses most of the reduction in economic activity."
"The uptick in economic activity stems mainly from the higher federal spending on goods and services and the associated increase in aggregate demand as households and businesses boost their spending in response to the restoration of their income following the shutdown," he added.
According to the CBO's assessment, many of the negative economic impacts of the shutdown will be temporary but will intensify the longer federal agencies remain closed.
The report also stressed that the effects on the economy depend on the decisions the Trump administration makes throughout the shutdown and noted that how federal employees and contractors respond to delayed wages remains uncertain.
Meanwhile, on Capitol Hill, Senate Minority Leader Chuck Schumer, D-N.Y., said Tuesday that the nearly monthlong government shutdown could stretch into November, when millions face soaring health insurance premiums as Affordable Care Act (ACA) subsidies expire.
Senate Democrats voted against a clean stopgap funding bill for the 13th time earlier on Tuesday, insisting that Republicans extend the expiring ACA tax credits before they vote to end the shutdown.
Nicole Weatherholtz ✉
Nicole Weatherholtz, a Newsmax general assignment reporter covers news, politics, and culture. She is a National Newspaper Association award-winning journalist.
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