Economic Outlook

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Steady growth and inflation sidestep record US government shutdown

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This article was written By Mahir Rasheed, Senior Economist, Swiss Re Institute & Gioele Giussani, Junior Economist, Swiss Re Institute

The US government shut down is over, after 43 days, the longest ever. We estimate that it has shaved  around 1 percentage point off US GDP growth in the fourth quarter of 2025,  and anticipate a mechanical rebound of output lost in the first quarter of next year.

Figure 1: US GDP growth impact of government shutdown

Non-farm payroll data was unavailable due to the shutdown, but alternative labour market data show ongoing weakness, with government-led layoff announcements rising sharply this year.

Figure 2: US layoff volumes

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Economic and financial risk insights Steady growth and inflation sidestep record US government shutdown

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