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The United States is now in the grip of what could become the longest federal government shutdown in its history, crossing one month with no breakthrough in sight. As political stalemate deepens in Washington, the economic cost continues to snowball , and experts warn the damage may soon become irreversible, said a TOI report. Economic output worth over $7 billion has already been permanently lost, according to the latest estimates from the Congressional Budget Office (CBO). If the shutdown stretches into December, losses could rise to $11 billion, and hit $14 billion if the standoff continues into the holiday season. The crisis is hitting federal workers, small businesses, healthcare programs and consumer confidence , compounding the strain on an economy already showing signs of weakening. ‘Economy Bending Toward Breaking Point’ Economists say the prolonged shutdown risks tipping the US economy from slow growth into contraction. “The economy is fragile and a government shutdown could become a bigger problem much faster than people think,” , Mark Zandi, Chief Economist, Moody’s Analytics (quoted by CNN) Hiring is already stagnating, investment decisions are being delayed, and rising automation trends have led to workforce cuts. “We’re not creating any jobs of consequence,” Zandi added. If government pay delays trigger cutbacks in household spending, analysts warn job losses could accelerate, pushing the labour market into deeper distress. Small Businesses, Workers at the Breaking Point The shutdown is also choking small business cash flow. According to a US Chamber of Commerce assessment cited by CNN, 65,500 small government contractors have nearly $12 billion in payments at risk this month alone. Meanwhile: 670,000+ federal workers are furloughed without pay (Bipartisan Policy Center)730,000 more are working without pay (CBS News)4,000 federal staff face layoffs, though a court has blocked dismissals temporarily President Trump has said a private donation of $130 million , reported to be from billionaire Timothy Mellon (CBS News) , is helping fund military pay. Healthcare, Education Programs in Danger The shutdown has also unfolded alongside major policy deadlines. With Affordable Care Act subsidies stuck in political limbo, 22 million Americans could see healthcare premiums surge 26% on average, according to an analysis by KFF cited by CNN. Simultaneously, more than 65,000 children across 41 states and Puerto Rico risk losing access to Head Start early education programs, threatening child care stability and workforce participation. “This isn't delayed spending , it simply disappears,” - Joe Brusuelas, Chief Economist, RSM US Consumer Confidence Cracks , Fed Now Watching Closely Consumer sentiment has fallen to its lowest level since April, according to The Conference Board. Analysts say if the shutdown crosses Thanksgiving, the blow to spending and hiring may cause lasting harm. Zandi cautioned: “When confidence breaks, the stock market wobbles. If this stretches beyond Thanksgiving, there’s no quick recovery.” The Federal Reserve , already cutting rates to support a slowing job market , may face pressure to ease further as the shutdown undermines demand. Political Standoff With No End in Sight The shutdown began after Congress failed to pass a short-term budget extension by October. The House approved a bill to keep the government open until November 21, but it stalled in the Senate. This impasse is now the second-longest shutdown on record, trailing only the 34-day shutdown of 2018-19. Economist Diane Swonk (KPMG) said widening economic pain risks fueling social and political tensions: “Low- and middle-income households are struggling… This is a man-made crisis feeding an already uncomfortable situation.” Key Numbers at a Glance Key Numbers at a Glance 670,000+ federal workers furloughed730,000 federal employees working without pay$12 billion in payments at risk for small government contractors$400 million per day estimated loss from furloughed workers (CBO estimate)$14 billion potential GDP loss if the shutdown lasts eight weeks Americans Are Feeling the Strain From delayed paycheques to frozen government services, millions of Americans , particularly low-income households , are now on edge. Many rely on federal assistance, and delays could deepen hardship for families already battling inflation and rising borrowing costs. “People aren't comforted by soaring AI stocks when they can’t pay credit card or student loan bills,” Zandi noted. Outlook: If the Shutdown Continues Economists warn: Holiday spending could collapseLayoffs could climb sharplySmall businesses may shutterConfidence damage may be long-lasting If Washington fails to break the deadlock soon, the shutdown could become a major turning point for the US economy , and for American households struggling to stay afloat.
