U.S. government shutdown enters day 11 as year-end outlook takes focus

Hello, I’m Thomas Park.

Today, I’ll look at the ongoing U.S. federal government shutdown, now in its 11th day, and what the U.S. economy may face as year-end approaches. We’ll examine how political turmoil affects the economy and what to watch amid the uncertainty.

A Government Shutdown for the First Time in Seven Years: What’s at Stake?

The federal government shutdown began on October 1, 2025, after the Senate rejected a funding bill. It is the first such shutdown in about seven years, since December 2018. The central dispute is the sharp divide between the two parties over extending subsidies under the Affordable Care Act, also known as Obamacare.

What happens during a government shutdown? Federal public services are disrupted, hundreds of thousands of jobs are put at risk, and significant economic losses are expected. National parks close, passport processing is delayed, and various government services are suspended. At the same time, federal workers furloughed without pay cut back on spending, directly affecting the real economy.

The possibility that this shutdown could drag on is particularly worrying. With the parties’ differences showing little sign of narrowing, the longer the shutdown lasts, the greater the damage will become.

The Shutdown’s Real Impact on the Economy

The economic fallout from a government shutdown is more complex and far-reaching than many expect.

First, weaker consumer spending. Delayed paychecks or layoffs can curb household spending, while delays in housing and small-business loans can hurt those sectors as well. Reduced spending by federal employees and their families has an immediate impact on local economies, especially in the Washington, D.C., area.

Second, deteriorating investor sentiment. Stocks of companies that depend heavily on government spending may come under pressure. In sectors such as defense, investor sentiment can weaken even if the underlying impact is limited. As uncertainty grows, companies may delay new investments and put hiring plans on hold.

Third, global supply chain disruptions. Small administrative setbacks can have a ripple effect, causing delays and higher costs across global supply chains. Delays in customs inspections and import and export permits can affect international trade.

Where Is the U.S. Economy Headed by the End of 2025?

Despite the headwind of the shutdown, the U.S. economy remains fundamentally resilient. Growth is expected to slow somewhat in 2025 as the cumulative effects of monetary tightening take hold, but consumption and investment should remain relatively steady, supporting continued growth.

In the first half of 2025, economic uncertainty rose amid factors including the Trump administration’s tariff policies, and consumer spending softened. The labor market remained in good shape: unemployment edged up slightly, but employment continued to grow steadily. Inflation also showed positive signs, with price increases slowing.

The key phrase for the U.S. economy as year-end approaches is “soft landing.” The effects of high interest rates are gradually emerging and inflation is coming under control, but the challenge is to sustain moderate growth without tipping into recession.

Overall, business investment is expected to grow by 3.4% in 2025. As uncertainty begins to ease, investment should recover, with growth projected to reach 6.3% in 2026. This suggests that the current political turmoil is temporary and that investment will continue to recover over the medium to long term.

Three Things to Watch

First, Federal Reserve rate policy. If the shutdown delays the collection and release of economic data, it could complicate the Fed’s policy decisions. But the Fed is already carefully balancing its dual mandate of price stability and maximum employment. If the shutdown ends in the short term, the Fed is likely to maintain its current policy stance.

Second, consumer sentiment. Consumer spending accounts for about 70% of the U.S. economy, so a pullback would have a significant ripple effect. The key question is whether anxiety over a prolonged shutdown will keep consumers from spending, or whether a resilient labor market will continue to support consumption.

Third, when a political compromise will be reached. Historically, government shutdowns have ultimately been resolved through compromise. The question is when. If the shutdown continues into the Thanksgiving and Christmas holiday season, it could dampen consumer spending at a critical time.

In Closing

As the government shutdown enters its 11th day, the U.S. economy is facing short-term disruption, but its medium- and long-term fundamentals remain sound. A resilient labor market, stabilizing prices and signs of a recovery in business investment are supporting the economy.

Of course, the outlook could change if political uncertainty persists. But history offers a lesson: even when the U.S. political system approaches extremes, it has ultimately found practical compromises.

As the U.S. economy heads toward year-end, we’ll need to watch whether it can overcome the temporary obstacle of the shutdown and return to a path of steady growth. I encourage investors not to be swayed by short-term volatility and to focus on the underlying strengths of the U.S. economy.

I look forward to sharing more valuable insights in my next column.

Thank you.