CBO was asked for information about the effects on the economy of the lapse in discretionary appropriations (often called a government shutdown) that began on October 1, 2025. This letter presents estimates of the effects under three scenarios: a shutdown that ends after four weeks (on October 29), one that ends after six weeks (on November 12), and one that ends after eight weeks (on November 26).
In CBO's assessment, the shutdown will delay federal spending and have a negative effect on the economy that will mostly, but not entirely, reverse once the shutdown ends. The agency estimates that real gross domestic product (GDP), which has been adjusted to remove the effects of inflation, will be lower in the fourth quarter of 2025 than it would have been in the absence of a shutdown. Depending on its length, the government shutdown will reduce annualized real GDP growth in that quarter by 1.0 to 2.0 percentage points. After the shutdown, real GDP will be temporarily higher than it would have been otherwise. Although most of the decline in real GDP will be recovered eventually, CBO estimates that between $7 billion and $14 billion (in 2025 dollars) will not be.
The effects of the shutdown on the economy are uncertain. Those effects depend on decisions made by the Administration throughout the shutdown. In addition, how federal employees and contractors respond to the delay in compensation is uncertain.
