Five-Week Shutdown in 2018/19 Cost U.S. Economy $3 Billion

The five-week long U.S. government shutdown between December 2018 and January 2019 reduced U.S. GDP by $3 billion, an analysis by the nonpartisan Congressional Budget Office found. Lost output from furloughed federal workers, delayed or lost government spending and wage payments as well as reduced demand cost the economy $11 billion in the short term between the two quarters affected by the shutdown. A total of $8 billion of this was estimated to have been made up after the shutdown ended on January 25. Of the total delayed federal spending of $18 billion over the five-week period, $3 billion was connected to the wages of furloughed employees, which is non-recoverable spending, while $6 billion were in wages expected to be paid out late to essential employees after the shutdown ended. The remaining $9 billion was made up by government spending on good and services, which would also only be partially caught up on after the shutdown.

As of Friday, September 29, the U.S. is heading for another government shutdown as neither an agreement on the necessary budget legislation nor on a so-called stopgap bill to fund the government through November 17 is being reached. As Congress needs to buy more time to agree on actual 2023/24 spending bills, a stopgap is likely the only solution to avert a shutdown from 12.01 a.m. Sunday onward. However, Republican infighting has thrown the bipartisan Senate stopgap measure into jeopardy, as a small group of hardline conservatives in the House vehemently oppose it. The group, including Matt Gaetz (R-Fla.), has resisted attempts by Speaker of the House Kevin McCarthy (R-Calif.) to reach a consensus. As McCarthy's speakership hinges on the group, he has denied a vote on the stopgap bill in the House even though it enjoys bipartisan support in both chambers. The group of hardliners is also preventing the House to pass a Republican-led measure to stop the shutdown as the party's majority is too slim.

No matter the bill's eventual fate in the House, it might itself not arrive there before Monday anyways, as one senator, Republican Rand Paul of Kentucky, has opposed a faster vote due to the included continuation of aid to Ukraine.