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America's $15 Billion-a-Week Shutdown Meltdown: The Economy Is Starting to Crack

By Khac Phu Nguyen

America's $15 Billion-a-Week Shutdown Meltdown: The Economy Is Starting to Crack

This article first appeared on GuruFocus.

The U.S. government shutdown has entered its 36th day the longest in American history and the damage is stacking up fast. Economists estimate the deadlock is draining anywhere between $10 billion and $30 billion a week from the economy, with most placing the hit near $15 billion. Unlike past shutdowns that ended with a quick rebound once spending resumed, this one could be tougher to shake off. Inflation anxieties are running high, households are stretched, and millions of Americans are now losing access to federal aid programs just as the holiday season begins.

The Congressional Budget Office estimates growth could drop by as much as 2 percentage points this quarter if the impasse drags on, with roughly $14 billion potentially lost for good if it lasts through Thanksgiving. About 650,000 federal workers have already been furloughed, and the Trump administration's push to cut jobs and question retroactive pay has added to the uncertainty. Private contractors are being hit just as hard, with $24 billion in government spending frozen and small firms missing out on $2.5 billion in SBA loans. That squeeze is already feeding through to payrolls, travel, and business investment all critical gears of the U.S. growth engine.

The social pressure is just as visible. Washington announced it would only partially fund the Supplemental Nutrition Assistance Program for November, covering about half of normal benefits for the 42 million Americans who depend on it. Food banks from Texas to Florida are bracing for a spike in demand, while childcare programs like Head Start are losing funding for thousands of families. Economists, including those at Moody's (NYSE:MCO) and Barclays, warn that consumer sentiment could weaken further if the shutdown stretches into December a moment when retailers rely on peak spending. For now, each passing week of gridlock is another $15 billion shaved off momentum, testing the resilience of an already uneasy U.S. economy.

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