• The federal government is set to reopen after a record-breaking shutdown, with Congress preparing to approve a negotiated deal
  • The six-week closure cost the U.S. economy an estimated $16 billion in lost wages and is projected to reduce Q4 growth by 1.5 percentage points
  • Federal operations including airline services, economic data reporting, and welfare programs will gradually resume, though some disruptions will persist

Deal Reached to End Historic Shutdown

President Donald Trump announced the imminent reopening of the federal government Thursday as congressional leaders finalized a compromise package to end the longest government shutdown in U.S. history. The Senate has already approved the deal, and House Speaker Mike Johnson is targeting a vote as soon as Wednesday to finalize the reopening, according to people familiar with the matter.

The breakthrough comes after six weeks of political gridlock that left roughly 1.25 million federal workers without paychecks and disrupted critical services across the economy. If passed and signed by Trump, federal operations—including airline services, economic data reporting, and welfare programs—will gradually resume, though administration officials warn some disruptions will persist during the transition period.

Economic Toll Mounts

The Congressional Budget Office projects the shutdown will reduce fourth-quarter growth by 1.5 percentage points, with federal workers losing roughly $16 billion in wages during the closure. While most economic activity is expected to recover in early 2026, about $11 billion in economic output will be permanently lost, the CBO found.

"What do you do if you're driving in the fog? You slow down," Federal Reserve Chair Jerome Powell remarked recently when asked about the economic uncertainty created by the shutdown. The halt in federal contract awards and economic data releases slowed business activity and monetary policy decision-making, leading the Fed to reconsider further interest rate cuts.

Consumer confidence reached a three-year low during the shutdown, driven by financial insecurity and uncertainty over government services. The temporary spike in unemployment and disruption to travel and restaurant businesses created ripple effects throughout local economies dependent on federal customers and funding.

Welfare Programs in Disarray

The Trump administration's handling of welfare programs, particularly SNAP food aid, created additional confusion during the shutdown. States that attempted to provide full SNAP benefits were ordered by federal officials to undo those actions, threatening penalties and adding confusion for millions of recipients.

Legal challenges resulted in courts intermittently ordering payments amidst ongoing uncertainty, with some states briefly resuming benefits before Supreme Court intervention halted the process pending appellate review. The administration has faced continued disputes over government funding and policy priorities, including Trump's tariffs and contested welfare program funding.

Efforts to restore normal operations will begin immediately after the bill's passage, though administration officials caution that some systems may take days or weeks to fully reactivate. The lasting economic and societal costs are likely to influence political debates and policy reforms moving forward, particularly around mechanisms to prevent future prolonged shutdowns.

Correction: An earlier version of this article misstated the timing of the House vote. Speaker Johnson is targeting a vote as soon as Wednesday, not Tuesday.