Government shutdown looms as new speaker struggles to control hardliners

A government shutdown happens when Congress doesn’t approve funding for the federal government by the time the new fiscal year starts on October 1. It can be averted briefly if a short-term funding bill is passed, like what happened just before midnight on September 30. Each year, Congress must pass the 12 appropriation bills that make up the discretionary spending budget and set funding levels for federal agencies.

On a national scale, government shutdowns can have far-reaching economic consequences, hampering growth and promoting uncertainty, especially if they drag on. Some of these costs include raising the unemployment rate, lowering the growth in gross domestic product (GDP), and raising the cost of borrowing. Each week of a government shutdown could cost the US economy $6 billion and shave GDP growth by 0.1 percentage points in the fourth quarter of 2023, according to estimates by EY.