According to CCTV News, as of November 4th local time, the US federal government shutdown had lasted 35 days, tying the record for the longest shutdown set by President Trump during his previous term. With the Senate rejecting the temporary funding bill for the 14th time, the shutdown will continue, potentially setting a new record.
Goldman Sachs Economist Alec Phillips has warned that the current US government shutdown could be the most severe economic impact on record. He points out that the deadlock in Washington could cost the US economy more than one percentage point in the last quarter of 2025, reducing GDP growth to just 1.0%.
"It could not only exceed the 35-day partial shutdown of 2018-2019, but its scope would also far exceed previous long shutdowns—which were previously mainly limited to a few sectors. If the shutdown lasts longer, it could exacerbate the dampening effect on federal procurement and investment, and could even spread to private sector activities," he wrote in a newly released report.
This is a significant downward revision. Goldman Sachs had previously predicted a stronger end to the year, but now believes the government shutdown will lead to delayed federal spending, hiring delays, and reduced investment.
Specifically, according to Goldman Sachs 's calculations, if the US government shutdown lasts for six weeks, it could reduce US economic growth by 1.15 percentage points in the fourth quarter, with a rebound not expected until early 2026. Phillips stated that the disruption to services across multiple sectors, from air traffic control to food stamp programs, is continuing to worsen, and Congress is facing increasing pressure.
However, Goldman Sachs also predicts that the first quarter of 2026 will receive an additional 1.3 percentage point boost to the growth rate as some federal purchases and investments are postponed from the fourth quarter of 2025 to the first quarter of 2026. This intertemporal effect reveals that the economic fluctuations caused by the government budget impasse may be redistributed rather than completely eliminated over time.
Overall, unlike previous government shutdowns that targeted specific agencies, this shutdown involved a complete failure of congressional funding, making it broader in scope and impact.
Goldman Sachs stated in its report: "A government shutdown would have the largest economic impact in history. Its prolonged duration could ripple through private sector activity, delaying investment and hindering consumption."
How much longer will it be closed?
On November 4 local time, the U.S. Senate attempted for the 14th time to advance a temporary funding bill that had already been passed by the House of Representatives to maintain the normal operation of the federal government, but the procedural vote failed to obtain the 60 votes required to advance the bill.
This has led to the continuation of the fiscal deadlock that triggered the government shutdown. The record for the longest shutdown will be broken starting at midnight Eastern Time on November 5, surpassing the previous record of 35 days from the end of 2018 to the beginning of 2019, becoming the longest shutdown in U.S. history.
However, Goldman Sachs believes that there are increasing signs that the government shutdown may end soon.
The main point of contention between Democrats and Republicans regarding the temporary funding bill lies in healthcare benefit spending. Enrollment for the Affordable Care Act (ACA) in the U.S. began on November 1st for fiscal year 2026. Because the two parties failed to reach an agreement on related government subsidies, insurance... The company announced a significant increase in annual premiums. Statistics indicate that without government subsidies, each insured person's annual health insurance costs could increase by $1,000.
Meanwhile, the November 4th election and the upcoming congressional recess could shift political motivations. Several key states in the U.S. are holding elections on November 4th for positions such as governor and mayor, with fierce competition between the two parties. Furthermore, public sector unions, including the General Labor Union, are now calling for a resolution, adding pressure on Democrats and Republicans to reach an agreement.
Goldman Sachs believes a possible compromise is to reinstate the government now and commit to a vote on healthcare subsidies before the November 21 deadline. Phillips notes, "The momentum for an agreement seems to be building."
“We underestimated how long the shutdown would last. But political and financial pressures are building, and the window for compromise has finally opened,” he added.
(Article source: CLS)
