The Rundown - Deep Dive: Economic Shock of the Government Shutdown

Episode Date: November 8, 2025

The 2025 U.S. government shutdown is now the longest in American history. Food stamps are drying up, workers are going without paychecks, and people are having a harder time making ends meet. In this week's deep dive, Zaid breaks down the government shutdown's impact on the U.S. economy. Follow us on Instagram ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@therundowndaily⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠

Welcome back to the rundown for another weekend deep dive. Today, we are taking a look at the economic impact of the government shutdown. The 2025 U.S. government shutdown is now the longest in U.S. history, surpassing the previous record of 34 days set back in 2019. The shutdown is now being a real drag on the economy, impacting the lives of millions of Americans, and it's coming at a time when the economy was already starting to show signs of weakness. So in today's episode, we'll take a closer look at the end of the end of the end of the economy. We'll take a closer look at the economic impact of the shutdown, including the effects on workers, consumers, travelers, and businesses.

We got a great one for you today. Let's dive in. The impact of this government shutdown has come in waves. The most immediate impact, of course, is on the people who work for the federal government. There are about 2.3 million civilians employed by the federal government today. And according to the bipartisan policy center, at least 670,000, federal employees have been furloughed since the shutdown started back on October 1st. Now, what does that mean? Well, when an employee is furloughed, they're told not to come into work, and they're not paid during the period that they are furloughed. So that means that hundreds of

thousands of federal workers across multiple federal agencies like the Department of Health, the Department of Education, the Department of Labor, and many more are now sitting at home without a paycheck. But it gets worse, because on top of the furloughed workers, there are thousands of exempted employees who are legally required to work, but without pay. This includes air traffic controllers and TSA agents who are forced to work, and this is causing chaos at the airports. You know, these people already have a stressful job as it is, but now they have to show up to work without getting their paycheck. But that's just the civilian side of the federal government. There are also 1.3 million active duty military members and over 750,000 National Guard and reserve personnel who are required to serve without a paycheck as well.

Now, they did get paid in October, but only because the Trump administration managed to reallocate other funds. But that might not work again. November 14 is going to be a big date to watch because it could be the first time in U.S. history that members of all military branches could miss a paycheck due to a government shutdown. And the real kicker here that makes this shutdown different from all other shutdowns is back pay. See, in the past, it was a given that all furloughed federal employees would be paid retroactively once the government reopened. But this time, the White House has refused to guarantee back pay, causing a huge cloud of uncertainty. Federal employees are dipping into their savings or getting a second job as Uber drivers to make ends meet, and a failure to provide back pay would force these workers to take a financial hit.

And with all these federal employees furlode and not working, that's starting to have a real impact on people and businesses all over the country. So let's talk about it. So what happens when over 600,000 federal workers stopped working? shut down key government services, well, the private sector starts to take a hit. The clearest example of this is at the airports. As I mentioned earlier, air traffic controllers and TSA agents are required to work without pay, but some of these workers have decided to call out of work. And that's resulting in staffing issues at airports all over the country. In fact, here in my hometown of Houston, TSA wait times hit three hours at one point in this past week

because of a lack of available TSA lanes. So now the FAA has stepped in to force airlines to cut flights because of staffing issues. 4% of flights were cut starting on Friday, November 7th, and slowly ramping up to 10% flight cuts by November 14th. And all of this is having an impact on the economy. The U.S. Travel Association estimates that the travel economy has already lost $4 billion as a result of the shutdown. The Transportation Secretary Sean Duffy warned that if the shutdown continues, flight cancellations could rise to 20%. So if this doesn't get worked out soon, travelers could be faced with massive delays. And with, With Thanksgiving right around the corner, airports might come to a standstill.

But beyond just travel, the shutdown is also choking off capital for small businesses. The Small Business Administration, or SBA, is completely closed. That means that no new loans are being processed. As of late October, the shutdown has already blocked an estimated $2.5 billion in SBA loans for about 4,800 small businesses. See, small businesses try to acquire SBA loans over getting a loan from a traditional bank because of favorable terms. But now that thousands of small businesses

can't get an SBA loan because of the government shutdown, they're being forced to turn to pricey or private options like traditional banks or even credit cards. Then there's the impact on federal contractors.

These are private companies that do work for the federal government, everything from IT to security to janitor work. These companies are having to furlough their own workers. Pretty much any business that is reliant on government contracts

for revenue is being impacted by the government shutdown. In fact, none of these businesses will be able to win new contracts until the government shutdown ends. And there's even more examples. You know, national parks and museums are partially closed because of limited staff. Grant and research from the NIH has been paused. The FDA has paused some inspections. We're also not getting economic data from the government so investors don't have the

latest inflation and labor market data, which makes it harder for the Federal Reserve to make the most informed decision when it comes to interest rates. And the most alarming of all is the pausing of some critical government assistant programs, which is impacting the lives of millions of Americans. You know, the government shutdown is a political story. It's also an economic story. But I also want to highlight some of the real world impacts on everyday Americans,

especially those relying on government assistant programs because they're starting to feel the most pain from the shutdown. So millions of Americans rely on government assistant programs and some of these programs are being paused because of the shutdown. Let's start with the supplemental nutrition assistance program or SNAP, this program provides food benefits for 42 million low-income Americans. In 2024, the average recipient received $188 a month. And because of the shutdown, the Trump administration initially planned to withhold SNAP benefits

for the month of November. Now, because of a ruling in federal court, the administration is partially funding SNAP, covering about half of what families normally receive. Beyond just food assistance, housing assistance is also at risk. The Department of Housing and Urban Development, or HUD, says that payments, for Section 8 voucher holders are expected to continue through November, but critically, no new Section 8 vouchers will be issued. And then there's other stuff, too.

With federal workers being furloughed, there's less available staff to answer questions regarding Social Security, Medicaid, or Medicare, which impacts senior and low-income people. So the biggest impact and pain from this government shutdown is starting to hurt those most in need. So what's the takeaway here? Well, it looks like this government shutdown is starting to have a real impact on the economy. While the early days of the shutdown were barely noticeable to most Americans, things are starting to crack. TSA lines and airports are growing, flights are being delayed and canceled, and critical government

assistant programs are being paused. Now, typically government shutdowns don't have a permanent or noticeable impact on the economy, but this shutdown is now the longest in history. On top of that, the current economy is in a weird place right now. If you look at the stock market, it's being held up by just a few big tech companies and the AI hype. But they're starting to be growing concerns of an AI bubble and, and a slowing labor market.

So this government shutdown is only adding to that with federal workers being furloughed with potentially no back pay. According to some analysts, this shutdown is estimated to cost the economy about $15 billion every week. And I feel like that number is only growing the longer this shutdown goes.

And look, it's possible that once the government opens back up, if it ever does, that we're going to forget this ever happen, that the economic impacts of this shutdown will be negligible. So let's just hope that the politicians in D.C. can come to an agreement before this shutdown leaves a more permanent scar

on the economy and the people that need to help the most. Well, all right, guys, that's it for today's weekend, Deep Dive. Hope you guys enjoyed today's episode. If you did, and you have like five extra seconds, consider giving us a five-star rating on Apple, Spotify, YouTube, or wherever you listen to your podcast. And if you are listening on Spotify, don't forget to vote in today's Spotify poll. Leave us a comment on Spotify.

Let us know what topics you want us to cover in future DeepDive episodes. All that engagement really does help us out, and it helps other people find the show. Thank you guys so much for listening, watching, and commenting. Shout out to Mike and Connor for all the work behind the scenes. And we'll see you guys back here tomorrow. Frozen lasagna, medium power, 15 minutes. Sounds like Ojo time.

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