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The Economic Costs of a Government Shutdown

The economy continues to recover from the Great Recession. Businesses have added 13.5 million jobs over a record 68 consecutive months of private-sector job growth. Unemployment has been slashed in half to 5.0 percent from its peak of 10.0 percent. And consumer confidence in 2015 is higher than it’s been at any point since the recession began. While there is more work to be done, substantial progress has been made.

However, upcoming deadlines could risk a return to the sort of fiscal policy uncertainty that cost the economy nearly 1 million jobs from late 2009 to 2013.

First, Congress must act to fund the government by December 11 to avoid another shutdown and prevent the negative impact it could have on gross domestic product (GDP), jobs and millions of Americans who depend on federal programs.

Second, if Congress fails to avert a shutdown, it could call into question its ability to meet other deadlines without causing economic damage. Long-term highway funding and numerous tax provisions hang in the balance this year. The confluence of these deadlines at a time when there is already increased uncertainty stemming from economic developments abroad adds to the potential for harm.