What it means for your money
Photo by Yasin Ozturk/Anadolu via Getty Images
The federal government shut down on Oct. 1. Depending on how long a shutdown lasts, it could have far-reaching implications for household finances.
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Those repercussions might include anything from delayed paychecks and layoffs for federal workers to broad effects for other Americans, including disrupted travel plans and an inability to get a mortgage, economists said.
Enhanced subsidies for the Affordable Care Act — also known as Obamacare — that have made health plans less expensive for millions of enrollees in recent years are also indirectly at stake.
What is a government shutdown?
Every year, Congress must pass legislation to fund the federal government for the coming fiscal year. A shutdown occurs if Congress can’t wrap up the appropriations process on time.
Oct. 1 marks the start of the 2026 fiscal year.
During a shutdown, the government halts all unfunded “nonessential” functions, Jennifer Timmerman, investment strategy analyst at the Wells Fargo Investment Institute, wrote in a note Monday.
By comparison, “essential” services related to public safety, such as air-traffic control or national security, will keep operating, she wrote.
Social Security checks and Medicare benefits — which are considered “mandatory” government spending — would continue flowing, Timmerman wrote.
The last shutdown happened during President Donald Trump’s first term. It was also the nation’s longest on record, starting in late December 2018 and running 35 days, Thomas Ryan, a North America economist at Capital Economics, wrote in a note Sept. 26.
What’s at stake during a government shutdown?
A shutdown that lasts for less than two weeks is unlikely to have a material or lasting impact on the U.S. economy or household finances — though the negative effects mount as the weeks pass, said Mark Zandi, chief economist at Moody’s.
Most immediately, federal workers deemed to be nonessential are furloughed, economists said.
They won’t be paid during a shutdown, though they’d receive paychecks retroactively, Zandi said.
Senate Minority Leader Chuck Schumer (D-NY) speaks during a press conference alongside House Minority Leader Hakeem Jeffries (D-NY), following a meeting between the Congressional Democratic leaders and President Trump and Congressional Republican leadership on funding the government, outside of the White House in Washington DC, United States on September 29, 2025.
Nathan Posner | Anadolu | Getty Images
Government contractors — from companies that provide cafeteria services, to those that provide strategic advice to the government — would start to feel the financial pain after about three to four weeks, since they won’t be paid for services, Zandi said.
However, unlike federal employees, federal contractors have historically not received back pay, according to the Committee for a Responsible Federal Budget.
This income loss could put financial stress on…
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