The shutdown has ended – but this economist isn’t rejoicing quite yet

The U.S. government shutdown, which lasted 43 days, ended when Congress passed a funding bill signed by President Trump. Despite the end of the shutdown, an economist expresses concern about its lingering economic effects. The prolonged closure impacted consumer spending due to furloughed federal workers and a decline in consumer sentiment, which fell to levels not seen since the pandemic. Tourism also suffered significant losses, with estimates suggesting a loss of around $1 billion per week. The long-term economic consequences include a permanent loss of gross domestic product due to lost productivity, a cost that cannot be recovered. Internationally, the shutdown has further eroded trust in the U.S. as a global economic leader, especially amidst China's rise. This political dysfunction undermines the U.S. standing in the established trade and finance system. The economic pain was not distributed evenly. Lower-income individuals, particularly those relying on programs like the Supplemental Nutrition Assistance Program (SNAP), were hit harder. Black workers, who have a higher proportion of federal jobs compared to the private sector, were also disproportionately affected. Geographically, states with a large federal workforce, such as California, Washington D.C., Virginia, and Hawaii, experienced more significant impacts. Recovery from shutdowns typically depends on their duration. However, this lengthy shutdown, coupled with President Trump's statements about potential layoffs for furloughed federal employees, created prolonged uncertainty that may have influenced spending patterns. The full extent of the damage to international confidence is still unfolding. Other economic factors exacerbated the shutdown's effects. Across-the-board tariffs imposed by the Trump administration, affecting both allies and adversaries, contributed to economic hesitancy and a slowdown in investment. Rising inflation, also infl... download the app to read more