CBO: Shutdown Has Cost $18 Billion, Threatens Up to 2-Point Hit to Q4 Growth

Overview

• The CBO reports about $18 billion in economic losses so far from the federal shutdown after roughly four weeks without appropriations.
• Based on duration, the CBO estimates an annualized Q4 GDP reduction of 1.0 percentage point at four weeks, 1.5 points at six weeks, and up to 2.0 points at eight weeks.
• Between $7 billion and $14 billion of the losses are unlikely to be recovered even after government operations resume, the CBO says.
• The analysis cites three channels driving the hit: curtailed federal services and pay, reduced goods spending including SNAP-related purchases, and a temporary demand shortfall weighing on private productivity.
• The office notes a temporary rebound in output once the shutdown ends but emphasizes substantial uncertainty tied to how agencies manage program operations and furloughs.