The United States government has entered a partial shutdown on October 1, 2025, due to Congress's failure to pass essential budget appropriations for the upcoming fiscal year. This marks the first federal funding lapse in nearly seven years and the third during President Donald Trump's administration.
The shutdown stems from a significant political divide between Republicans and Democrats regarding budgetary priorities. Republicans advocate for program reductions, while Democrats prioritize the preservation of health and social services, creating a substantial impasse in negotiations. During a shutdown, numerous federal employees face furlough or are required to work without immediate pay if their roles are deemed essential. This situation disrupts public services, including national parks and nutrition programs, impacting the continuity of government operations.
The Congressional Budget Office estimates that approximately 750,000 federal employees could be furloughed, with a daily payroll cost for these workers around $400 million. Historically, government shutdowns can exert considerable pressure on the U.S. economy. The CBO previously estimated that the five-week partial shutdown in 2018-2019 resulted in an economic loss of $11 billion, with $3 billion being irrecoverable. Nomura analysts suggest that each week of a shutdown could reduce economic growth by 0.1 to 0.2 percentage points.
While essential services like the Postal Service and Social Security benefits continue, many other functions, such as routine food and drug inspections and some passport processing, are suspended. Negotiations are ongoing in Congress to resolve the impasse. The duration and full extent of the shutdown's impact will depend on the outcome of these discussions. Previous significant shutdowns occurred in 1995-1996 (21 days), 2013 (16 days, costing the economy approximately $24 billion), and 2018-2019 (35 days). The current situation underscores the ongoing challenges in balancing fiscal responsibilities with public service provision.