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Key Takeaways
- Lawmakers in Congress failed to pass a measure keeping the U.S. government funded by a midnight deadline, meaning the government will shut down.
- Some offices will close. Crucial functions like the military and Social Security will continue.
- With federal workers home without pay, the economy will take at least a temporary hit. Key economic reports could be delayed.
The federal government has shut down for the first time in more than six years.
A midnight deadline came and went without Congress passing a measure to keep the government open. Republicans and Democrats in Congress are at a standoff over healthcare funding: Democrats have refused to pass a funding measure unless Republicans undo the healthcare cuts in the Big Beautiful Bill tax and spending law passed earlier this year.
Republicans have the White House as well as majorities in both chambers of Congress. They nevertheless need the support of Senate Democrats to pass a funding measure, but neither side has agreed to a compromise.
What This Means For The Economy
A government shutdown that began at midnight is expected to have a moderate impact on the economy that will worsen the longer it continues, as hundreds of thousands of government workers will stay home without pay and services are suspended. Important economic data will also likely be delayed until after the shutdown ends.
Hundreds of thousands of federal workers will likely stay home without pay for the time being. Some government offices will be closed, potentially including national parks, the Small Business Administration, and other services.
It was not yet clear exactly which ones would be shuttered. Other functions, such as the military and Social Security, will continue.
Economists anticipate the shutdown will cause a moderate hit to economic growth, which will continue the longer the shutdown goes on. The shutdown could also delay the release of crucial economic data including, Friday’s report on the job market from the Bureau of Labor Statistics.
The last government shutdown, in 2018 and 2019, lasted 34 days.
Markets have lately continued to climb in the face of the shutdown. The Dow finished Tuesday at a record high, with all three indexes logging gains.
