America’s Longest Government Shutdown Could Be Days Away. Here’s What’s at Stake

The government shutdown entered its 30th day on Thursday, amplifying its effects on household finances, the economy, and decision-makers who rely on economic data.

The federal government shutdown, which began on Oct. 1, continued as Democratic and Republican lawmakers remained deadlocked over health care policy. Gamblers on betting website Polymarket were pricing in a 30% chance the shutdown would end by Nov. 7, and a 64% it would be resolved the following week.

If the impasse is not broken by Tuesday, the shutdown will be the longest in history.

There was at least one indication Thursday of progress being made toward ending the stalemate. There were “a lot more conversations going on now … than perhaps there were a couple of weeks ago” between members of the two sides, Republican Senate Majority Leader John Thune said on CNBC Thursday.

In the meantime, the financial damage continued to accumulate on several fronts.

Household Hardship

The lowest-income households in the country braced for a serious financial impact, as the Department of Agriculture said it would stop funding the SNAP food aid program as of Saturday.

The program, although funded by the federal government, is administered by states, some of which may continue to give benefits to recipients during the shutdown. But at least 25 states have said they would not, according to reporting by Politico, putting many of the program’s 42 million beneficiaries at risk of losing access to their benefits.

The lowest-income families rely on SNAP to cover 90% of their food costs, according to an analysis by Oxford Economics. Food banks warned that the cutoff would put millions at risk of going hungry.

“For families already stretched thin, this lapse in benefits could mean impossible choices between food, rent, medicine, utilities, and more,” wrote The ARC, a group that serves people with disabilities, in a blog post. “People with disabilities already face higher rates of poverty and food insecurity, putting them more at risk.”

Federal employees who are either furloughed or working without pay will also feel the strain, even if the government eventually gives out back pay when the shutdown ends, as it has done in the past. Workers will collectively miss about 1.8 million paychecks as the shutdown drags on into November, the Bipartisan Policy Center estimated.

Shutdown Will Hurt The Economy

The pause in paychecks and benefits will have an effect on the national economy as well as individuals.

The Gross Domestic Product, a measure of the country’s economic output, will likely be dragged down by 1 to 2 percentage points in the fourth quarter, depending on how long the shutdown lasts, the Congressional Budget Office said this week.

For reference, the economy grew at an annualized rate of 3.8% in the third quarter, so a two-percentage-point reduction would more than cut the growth rate in half. The GDP would make up for that loss in the quarter the government reopened, as back pay goes out, the CBO said.

However, some of the losses would be permanent, with the U.S. losing $7 billion to $14 billion in economic growth, according to the CBO.

The Data Dark Age

The shutdown of the government’s statistical agencies means that economic reports on inflation, the job market, and other facets of the economy have been delayed and in some cases may never be released. A second month of reports is about to be delayed if lawmakers can’t reach an agreement.

A highly anticipated report on job creation in September from the Bureau of Labor Statistics, due Oct. 3, wasn’t published because of the shutdown. The shutdown will also delay, if not cancel entirely, the report for October, due Nov. 7.

Investors, business leaders, and officials at the Federal Reserve have had to go without the data while making key decisions.

Fed Chair Jerome Powell noted the data blackout this week after the central bank’s policy committee decided to lower interest rates. The data blackout could cause the Fed to be more cautious about moving interest rates if the shutdown is not resolved by its next meeting in December, he said.