The billion-dollar shutdown

Today marks the longest government shutdown in US history, surpassing the 35-day stalemate from President Trump’s first term. But while Washington has hit the snooze button, every extra day of inaction is costing the economy billions.

We’ve all heard about the immediate fallout: 42 million Americans are losing access to SNAP benefits, more than 650,000 federal employees have been furloughed or sent home without pay, and air-traffic controllers and TSA agents are bearing the brunt of reduced operations.

But the ripple effects extend far beyond airport gates.

The shutdown has cost the economy roughly $15 billion per week, according to Bloomberg Economics. That’s money not flowing into paychecks, spending, or contracts: an invisible tax on growth that is taking a toll, whether you notice it or not.

This shutdown is hitting harder

It’s not just the length and the cost of this shutdown that could cause more pain than previous government standoffs. The US is more economically fragile than it was seven years ago, weighed down by inflation and waning confidence in the job market.

It doesn’t help that monetary policy is flying blind. With key government agencies like the Bureau of Labor Statistics offline, the Fed has lost access to official data on inflation and employment, its two biggest inputs for setting rates. That means policymakers must rely on private sector estimates instead. And in this environment, the Fed is less focused on inflation (which appears to be cooling) and more on whether the labor market is holding up.

So far, the private data offers a mixed picture. Private companies added 42,000 jobs in October, beating estimates and rebounding from a 29,000 drop in September, driven mostly by large firms. But the recovery remains modest: Hiring is still below the 60,000-job monthly average, and job openings have fallen to their lowest level in more than four years.

Markets are feeling the freeze

About $24 billion in federal spending on goods and services has been frozen in just the first month of the shutdown, according to Bloomberg. There may be even more economic pain ahead: The Congressional Budget Office warns the impasse could shave up to 2 percentage points off fourth-quarter GDP, and if the gridlock stretches past Thanksgiving, about $14 billion could disappear for good.

With official data dark and the economy bleeding billions each week, markets are running on vibes—and it shows. The AI-fueled rally that powered much of this year is starting to lose steam as investors question how long growth and spending can hold up. Leaders at both Goldman Sachs and Morgan Stanley now expect a 10% to 20% market correction over the next year or two.

Investors may want to brace themselves—because if DC doesn’t blink soon, the market just might.—SY