US government shutdown begins: Thousands of jobs, top economy at risk

Dubai: The US government has shut down - the first in nearly seven years and adds fresh uncertainty to the world’s largest economy.

"The US government has shut down from today as politicians failed to agree on a plan to continue funding it. This is not the first time this has happened, and it certainly won’t be the last," said Ipek Ozkardeskaya, Senior Analyst at Swissquote Bank.

"Since 1976, there have been around 20 government shutdowns, caused by funding gaps lasting at least one business day. The average duration is about 8 days. Most shutdowns last only a few days, and only a handful stretched over multiple weeks. The longest in recent history was a partial shutdown that lasted 35 days between December 2018 and January 2019."

Analysts further warn the shutdown could turn serious if it blocks jobs and inflation data needed before the Fed’s next rate decision.

The shutdown halts operations across federal agencies, threatens delays in crucial economic reports, and puts as many as 750,000 federal workers on furlough, according to the Congressional Budget Office.

Trump raised tensions further, warning his administration could permanently fire “a lot” more employees if the standoff drags on.

Markets are bracing for the fallout. Investors fear delays in jobs and inflation data could cloud the US Federal Reserve’s next move on interest rates, which will have implications on government policy decisions worldwide.

A delayed release of Friday’s key US economic report could leave Wall Street flying blind, just as the jobs market shows signs of slowing and inflation remains above target.

This is why the shutdown threatens to derail a rally that has lifted the US market by 14% this year, with stocks having already been showing signs of strain as doubts grew over the jobs market’s strength.

Government shutdowns come with heavy costs. The 2018–2019 shutdown erased $3 billion in economic activity that was never regained, according to the Congressional Budget Office. Markets grew volatile, while consumer spending and business confidence weakened.

This round carries equally high stakes. Federal employees face delayed paychecks, airline operations risk disruption, food aid programs could be interrupted, and key economic reports — including the monthly jobs data — may be pushed back.

The U.S. Travel Association has warned lawmakers that a shutdown could wipe out $1 billion in travel spending every week, further straining an already stretched workforce.