The economic consequences of the current federal government shutdown hinge critically on how long it lasts. If it is resolved quickly, the costs will be small, but if it drags on, it could send the U.S. economy into a tailspin.

That’s because the economy is already in a precarious state, with the labor market struggling, consumers losing confidence and uncertainty mounting.

As an economist who studies public finance, I closely follow how government policies affect the economy. Let me explain how a prolonged shutdown could affect the economy—and why it could be a tipping point to recession.

Direct impacts from a government shutdown

The partial government shutdown began on Oct. 1, 2025, as Democrats and Republicans failed to reach a deal on funding some portion of the federal government.

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