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U.S. Economy Faces $14 B Loss If Government Shutdown Persists, CBO Warns

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  Published in Politics and Government on Monday, November 17th 2025 at 19:37 GMT by Fox Business

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U.S. Economy Faces a $14 B Loss If Government Shutdown Persists, CBO Warns

The latest analysis from the Congressional Budget Office (CBO) paints a stark picture of the economic fallout that would accompany a prolonged U.S. government shutdown. According to the CBO’s most recent forecast, a full‑year shutdown could shave roughly $14 billion off the federal budget—and, more consequentially, dent the nation’s gross domestic product (GDP) by 0.05–0.1 %. The warning comes amid a tense standoff between Democrats and Republicans over the 2025 fiscal year appropriations, as lawmakers wrestle over the size and scope of the next budget bill.

The “Shutdown Standoff”

The article, published on Fox Business, begins by summarizing the current impasse: the House Republicans have drafted a short‑term “fiscal 2025” appropriations package that extends government operations for 60 days, but the Senate—dominated by Democrats—has not yet agreed to a final version. If the two chambers cannot reconcile their positions, the federal government could be forced into a shutdown that would shut down non‑essential federal services.

A shutdown would mean that many federal agencies—such as the Department of Education, the Department of the Interior, and the Environmental Protection Agency—would suspend operations. While essential services, like national security and air‑traffic control, would continue, the shutdown would halt a wide array of programs that directly or indirectly support the economy.

The CBO’s Cost Estimate

The CBO’s estimate, which the Fox Business article links to the CBO’s own “Government Spending, Federal Debt and Economic Outlook, 2025” report, breaks down the cost in several ways:

The CBO’s methodology involves an accounting model that simulates the fiscal impacts of halted revenues and expenditures. It also factors in the multiplier effect—how reduced government spending cascades into lower private‑sector demand and vice versa.

Historical Context

The Fox Business piece notes that previous shutdowns have been less costly in absolute terms, but have still delivered tangible pain to the economy:

• 2018–2019: A 35‑day shutdown cost the U.S. roughly $1.5 billion in GDP.
• 2013: A 16‑day shutdown cost an estimated $1.3 billion in GDP.

While those figures are smaller than the $14 billion projected for a year‑long shutdown, the CBO’s estimate underscores that the magnitude of the loss is tied directly to the duration.

Political Fallout

Politically, the shutdown risk is playing out in a flurry of statements and counter‑statements from both sides. The article quotes a senior House Republican who says the short‑term appropriations package will “provide the stability needed for businesses to plan and for federal agencies to continue serving the public.” Meanwhile, Democratic leaders point to the package’s lack of “meaningful reform” and insist that a comprehensive budget must be agreed upon to avoid any “economic disruption.”

The debate also extends beyond Congress. Federal agencies have issued statements about the potential loss of funding for critical projects, while business leaders warn that a shutdown could jeopardize contracts and disrupt supply chains. For instance, the Defense Department’s stalled procurement would delay delivery of new weapons systems, while the National Institutes of Health would face interruptions in research funding.

Mitigation Strategies

If the stalemate continues, lawmakers can take a few routes to blunt the economic blow:

1. Continuing Resolution (CR) – A temporary funding measure that keeps the government running at the same levels as the previous fiscal year. While a CR avoids a shutdown, it can also keep fiscal policy stagnant, preventing the introduction of needed reforms.

2. Partial Shutdown – If only a handful of agencies are forced to close, the overall cost might be limited. The article notes that the CBO’s $14 billion estimate assumes a full‑government shutdown, so a partial shutdown would result in a lower figure.

3. Bipartisan Appropriations Bill – A comprehensive budget that resolves funding gaps and introduces targeted policy changes. Such a bill would require negotiation over contentious issues, such as defense spending levels, health‑care subsidies, and immigration policy.

The Fox Business article also links to a CBO analysis that indicates a 60‑day shutdown would still incur a cost of $8 billion, highlighting that even short‑term delays can be expensive.

Economic Impact in a Nutshell

A full‑year shutdown would:

• Reduce GDP by up to 0.1 %, a significant contraction for an economy that expanded at 2.1 % in 2023.
• Increase unemployment by adding thousands of furloughed federal employees to the jobless claims pool.
• Delay federal payments, pushing back payroll for federal contractors and many small businesses that rely on government contracts.
• Create uncertainty that can dampen consumer confidence and corporate investment.

In contrast, a carefully crafted CR or a short‑term shutdown would still leave a tangible imprint, albeit smaller in scale.

Looking Ahead

The Fox Business article ends on a note of urgency. With the Senate’s approval pending and a growing chorus of business and public‑interest groups calling for a quick resolution, the stakes are high. The CBO’s estimate of a $14 billion loss acts as a stark reminder that the economic consequences of a prolonged shutdown would not be limited to a few furloughed employees; they would ripple across the entire economy, affecting everything from GDP growth to the stability of federal contracts.

Whether Congress can sidestep this costly path hinges on the willingness of lawmakers to reach a bipartisan compromise. If they fail, the nation will have to face the full brunt of a shutdown’s economic damage—an outcome the CBO’s warning makes all the more chilling.