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The U.S. government shutdown has entered its 33rd day, and while a resolution may be imminent, economists warn that the economic fallout is already beginning.
Goldman Sachs economist in a note to clients Monday Alec Phillips He said the impasse in Washington would likely cost the US economy more than a full percentage point of growth in the final quarter of 2025, reducing GDP growth to just 1.0%.
This is a significant decrease. Goldman had previously expected to finish the year on a stronger note, but now believes the shutdown will lead to delayed federal spending, delayed hiring and reduced investment.
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If current odds are any guide, the shutdown could be even longer.
Prediction markets tracked by CFTC-regulated betting platform Kalshi peg the average expected time at 45.9 days, or through November 15.
As of now, there is a 75% chance it will last more than 40 days and a 35% chance it will last more than 50 days.
This standoff is on track to become the longest government shutdown in U.S. history, surpassing the 35-day shutdown in 2018-2019.
But the pressure is mounting. Missed wages for air traffic controllers and TSA qualifiers on Oct. 28 and other payments due on Nov. 10 threaten a repeat of the 2019 shutdown, when airport delays forced a last-minute compromise.
Meanwhile, SNAP food benefits, which are normally given the first week of each month, are also at risk; however, a recent court decision may allow partial payment using emergency funds.
Unlike previous shutdowns that targeted specific institutions, this one involves a complete cut in congressional appropriations and is broader in scope and impact.
“This shutdown will have the largest economic impact in history,” Goldman said in a note. “It may spread to private sector activities for a longer period of time, investments may be delayed and consumption may stop.”
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Immediate damage is expected to come from federal employee furloughs and delayed government procurement.
If the shutdown lasts six weeks, federal spending pushed into the first quarter of 2026 could boost growth by a slight 1.3 percent in that quarter, according to Goldman’s models.
Goldman Sachs sees growing signs that the shutdown may end soon. ACA enrollment begins Nov. 1, intensifying interest in health care subsidies; The November 4 elections and the upcoming congress recess may change political incentives. Public sector unions, including AFGE, are now calling for a solution, increasing pressure on Democrats and Republicans to reach an agreement.
So far, Democrats have resisted a clean funding bill, but polls show voters mostly blame Republicans and President Trump. A possible compromise could involve reopening the government now, with the promise of a vote on health subsidies before the Nov. 21 deadline.
Goldman thinks more drastic moves, such as repealing the Senate filibuster, are unlikely. Still, momentum towards a deal appears to be building, with forecast markets pointing to a decision in mid-November.
“We underestimated how long this shutdown would last,” Alec Phillips said. “But political and financial pressure is increasing and the window for compromise is finally opening.”
Image: Shutterstock
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This article Goldman Says Shutdown Is Nearing Its End, But Economic Damage Is Increasing originally appeared Benzinga.com
