Federal Shutdown's Economic Impact: A Deep Dive

The US government shutdown is ending, leaving significant economic impacts. Workers missed pay, flights were disrupted, and SNAP benefits delayed. Despite recovery potential, lasting issues remain, such as reduced consumer sentiment and hindered federal spending. Economists predict recovery, but some losses are permanent.

The longest federal government shutdown in US history seems set to conclude, having inflicted considerable strain on the languishing economy. Around 1.25 million federal workers were unpaid since October 1, impacting various sectors, from aviation to welfare programs. Congress appears on the brink of resolving the stalemate, yet the shutdown's repercussions will linger.

According to the Congressional Budget Office, the six-week shutdown is poised to shave 1.5 percentage points off fourth-quarter growth, significantly undercutting economic momentum. Although reopening should spur activity and compensate some losses, approximately USD 11 billion is lost for good, painting a challenging economic backdrop.

Flight cancellations and SNAP benefit delays exacerbated hardship, with hotels, restaurants, and tourism suffering drastically. Meanwhile, consumer sentiment plummeted to a three-year low, revealing widespread financial insecurity. Analysts remain cautiously hopeful for recovery as back pay for federal employees becomes imminent, despite the enduring scar on federal spending and market confidence.

(With inputs from agencies.)