Month-Long U.S. Government Shutdown Could Trim Q4 GDP Growth by Up to Two Points: CBO Evening Brief – 10.30.25
The U.S. government shutdown, now nearing the one-month mark, could reduce annualized Q4 GDP growth by 1 to 2 percentage points, according to a new analysis from the Congressional Budget Office (CBO). The agency noted that while economic activity would likely rebound once the government reopens, not all lost output will be recovered.
“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 report stated.
The CBO analyzed three shutdown scenarios—lasting four weeks, six weeks, and eight weeks—to quantify the impact. The agency projects that:
- A four-week shutdown would reduce annualized real GDP growth by 1.0 percentage point in Q4 2025.
- A six-week shutdown would reduce growth by 1.5 percentage points.
- An eight-week shutdown would reduce growth by 2.0 percentage points.
Once federal operations resume, the CBO expects a temporary rebound: GDP growth could rise by 1.4 percentage points after a four-week lapse, 2.2 percentage points after six weeks, and 3.1 percentage points after eight weeks.
However, that rebound would fade by Q1 2026, the agency said. “After the first quarter of 2026, the temporary boost to the level of real GDP would diminish as output returns toward the level it would have been in the absence of the shutdown, causing the effect on the growth rate to temporarily turn negative,” the report noted.
The CBO also warned of a temporary increase in unemployment as hundreds of thousands of federal workers remain furloughed. If all furloughed employees were counted as on temporary layoff, the unemployment rate would rise by about 0.4 percentage points for the month, the agency said.
Beyond the direct government impact, the shutdown is expected to lower aggregate demand, slowing production and hiring in the private sector.
The Bureau of Labor Statistics last reported an August unemployment rate of 4.3%, while the Chicago Fed estimates that rate has edged up to 4.35% in October, compared with 4.14% a year earlier—a modest but notable rise amid the broader slowdown.