Goldman Sachs has issued a stark warning that the ongoing month-long federal government shutdown could inflict the most severe economic damage in U.S. history. The investment bank highlighted that the current closure, now in its 34th day, affects a broader range of federal agencies than previous shutdowns, including the 2018–2019 episode that lasted 35 days but was partially mitigated by temporary funding for certain departments. With no resolution in sight until mid-November, economists at Goldman project a 1.15 percentage-point contraction in fourth-quarter 2025 GDP growth, followed by a rebound in early 2026.
Alec Philips, Goldman economist, explained that while brief shutdowns mainly disrupt furloughed workers’ productivity, extended closures risk deeper consequences, including delayed federal spending and investment, which may spill over into private sector activity. The firm noted growing pressure on lawmakers to act, especially after the first-ever missed Supplemental Nutrition Assistance Program (SNAP) payments and a worsening shortage of air traffic controllers.
Consumer confidence is beginning to wane as the shutdown persists into November. Moody’s Analytics economist Mark Zandi estimated a $30 billion weekly loss to the economy, translating to a 0.1% drop in annualized real GDP per week. Zandi emphasized that although macroeconomic impacts have been largely overlooked so far, this complacency is unlikely to last.
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\n\n— News Original —\nGoldman Sachs says government shutdown could hit economy harder than ever\n\nGoldman said the dent to economic activity could far exceed past shutdowns, as it forecasted an end to the impasse later this month\n\nByShare to TwitterShare to FacebookShare to RedditShare to EmailShare to Link\n\nFurloughed federal workers and volunteers collect groceries during the People ‘s Pantry Food drive to replenish food banks ahead of SNAP lapse at the USDA Headquarters, in the National Mall, Washington, DC on October 30, 2025. (Photo by Oliver Contreras/AFP via Getty)\n\nGoldman Sachs is warning that the economic hit from the month-long government shutdown could be the largest ever.\n\nSuggested Reading\n\nSnubbed for a job you deserved? Don ‘t get mad, get focused Wall Street wants to go 24/7Is ‘learn to craft ‘ the new ‘learn to code? ‘ \n\nThe investment firm said in an analyst note published Monday that the dent to economic activity could far exceed past shutdowns, as it forecasted an end to the political impasse in Congress during the second week of November.\n\nRelated Content\n\nAmazon stock soars 13% as the cloud powers shares toward their best day in yearsAmericans ‘ credit scores are falling as debt piles up. Here ‘s what to do about it\n\nGoldman Sachs noted that the current shutdown — now in its 34th day — affected far more agencies compared to the last government closure, which lasted 35 days from late 2018 into 2019 and set a record as the longest one yet. In that shutdown, Congress had passed short-term funding bills for some federal agencies so not every single one was closed down.\n\n”While the impact of a shorter shutdown — lasting 2-3 weeks, for example — would be largely confined to the lost work of furloughed federal employees, a longer shutdown could have a greater effect on federal purchases and investment, and potentially a spillover into private sector activity,” Goldman economist Alec Philips said.\n\nGoldman projected a 1.15 percentage-point reduction in 2025 fourth-quarter growth, followed by a rebound at the start of next year. It said there was growing pressure on lawmakers to reopen the federal government following the first missed food stamp payments ever and a worsening shortage of air traffic controllers.\n\nConsumer sentiment is starting to slide as the government shutdown drags on into November. Other forecasters such as Moody ‘s Analytics economist Mark Zandi recently projected a $30 billion economic loss per week. It amounts to a 0.1% reduction each week in the annualized real gross domestic product growth for the quarter.\n\n”The federal government has been shut down for nearly a month, and little attention has seemingly been paid to the macroeconomic fallout. Perhaps rightly so,” Zandi wrote last week. “This is unlikely to be the case for much longer.”\n\n📬 Sign up for the Daily Brief\n\nOur free, fast and fun briefing on the global economy, delivered every weekday morning.\n\nFacebookTwitterInstagramYoutubeRSS Feed© 2025 Quartz Media Network. All Rights Reserved.