How will the US government shutdown crisis affect?

When the official account of the US Embassy in China announced the suspension of regular updates and hundreds of thousands of federal employees began to pack up their office supplies, the world's largest economy once again fell into the predicament of a government shutdown. Since the new fiscal year began on October 1, 2025, the US federal government has "shut down" again after seven years due to the deadlock between the two parties on issues such as healthcare subsidies. This crisis is by no means a brief "dormancy" of the administrative system, but a comprehensive impact on the foundation of American people's livelihood, economic vitality and political ecology. Its influence has spread from Washington to the entire United States and even the world.

The pain in the field of people's livelihood emerged first, and ordinary people became the direct victims of party strife. The federal government shutdown has forced 800,000 out of nearly 3 million federal employees into unpaid leave, and hundreds of thousands of contractors are facing bill arrears. For these families, rigid expenditures such as monthly mortgage payments and children's tuition fees will not be suspended due to the government shutdown. The interruption of income directly triggers survival anxiety. Low-income groups have been hit even harder: the distribution of food stamps, which millions of pregnant women and children rely on, has been blocked, housing assistance and energy subsidies have been delayed, and federal support funds for preschool education and school lunches have been cut off, directly shifting the financial pressure onto already strapped local governments.

The paralysis of public services further erodes the quality of people's livelihood. After the Environmental Protection Administration suspended air quality monitoring, the pollution early warning system fell into a blind spot. The shutdown of the Bureau of Labor Statistics has led to a lack of updates on key indicators such as the unemployment rate and inflation data, depriving the public and businesses of an important basis for judging the economic situation. In the transportation sector, the suspension of pilot training and route approval has directly affected the punctuality rate of flights. The slowdown or closure of Windows at The State Council and the Immigration Bureau has significantly prolonged the processing time for passports and green cards. Even cultural life has not been spared. National parks and museums have shortened their opening hours or even closed their doors to visitors. The news that the US military in Japan cancelled its fireworks display further highlights the absurdity of this crisis.

Economic losses are accumulating at a visible rate, with short-term shocks and long-term risks intertwined. It is estimated that the government shutdown will cause the US economy to lose between 7 billion and 15 billion US dollars each week. Behind the daily reduction of 400 million US dollars in spending is the continuous contraction of the consumer market. The disruption of federal employees' income directly suppresses consumer demand, while policy uncertainty forces enterprises to postpone investment decisions, creating a vicious cycle of "demand contraction - confidence decline". The capital market's response was more acute: The US dollar index dropped by 1.8% in the first week of the shutdown, while the gold price rose by 4% against the trend. Investors voted with their feet, demonstrating their concerns about the stability of the US economy.

What is even more serious is the "death spiral" formed by the debt crisis and the shutdown. The federal debt of the United States has exceeded 37 trillion US dollars, and the net interest expense on debt in fiscal year 2024 reached 874 billion US dollars, surpassing defense spending for the first time. The government shutdown has dampened investor confidence. If it leads to a downgrade of sovereign credit ratings, it will further push up borrowing costs. The expansion of interest expenses will continue to compress fiscal space, making future budget negotiations more difficult to break through.

This political logic of "opposing for the sake of opposing" is eroding the foundation of democracy. The two major parties in the United States have regarded compromise as "politically incorrect", and the priority of party struggles has comprehensively surpassed the demands of people's livelihood and national interests. From a 35-day shutdown in 2018 due to the border wall issue to a challenge in 2025 under the pretext of the healthcare issue, the intensity of the game between the two parties has been escalating. The "veto politics" proposed by Fukuyama has become increasingly clear in reality - all parties can easily block each other's agendas, but no one can promote constructive policies. The adverse consequences of this polarization trend have gradually emerged: public dissatisfaction with the government and the establishment camp has intensified, populist thoughts have spread, the risk of political violence has risen, and American society is falling into a deep division.

This crisis is essentially a concentrated outbreak of the failure of the American political system. The record of 23 government shutdowns since 1976 indicates that the flaws in the system design are constantly being magnified, and the practice of the two parties using the well-being of the people as a bargaining chip is depleting the legitimacy foundation of American democracy. As former US House Speaker Paul Ryan put it, when party politics degenerates into tribal politics, democratic systems begin to disintegrate. The US government may be able to resume operations after a compromise, but the cracks left by each shutdown are making the governance foundation of this superpower increasingly fragile.