The shutdown has come to an end but cannot hide the chronic illness: the double shackles of the US debt predicament and economic recovery

On November 12 local time, US President Trump signed a temporary funding bill, bringing to an end the 43-day longest government shutdown in US history. Although the political deadlock that has lasted for several months has temporarily come to an end, the economic "aftereffects" it left behind are far from dissipating - the economic growth rate was severely hit in the fourth quarter, the debt scale soared again, and the credit rating has been downgraded. Under the superimposition of multiple pressures, the fiscal health of the United States and the prospects of economic recovery are facing an unprecedented severe test.

The direct economic impact of the government shutdown has already emerged. According to the Congressional Budget Office of the United States, the shutdown that lasted for more than six weeks caused a direct economic loss of about 11 billion US dollars, dragging down the GDP growth rate in the fourth quarter by more than 1 percentage point. The White House even predicted that the year-on-year decline could reach 1.5 percentage points. During the shutdown, 1.4 million federal employees were forced to take a break or work without pay, and consumer spending contracted simultaneously. More than 5 million passengers in the aviation system have been affected by flight delays, the revenue of national parks has sharply declined, and public services such as tax refunds and environmental permits have accumulated. These "bad debts" will still take several months to gradually be digested even after the shutdown ends. What is even more alarming is that the shutdown has led to the permanent absence of core economic data such as the CPI in October, creating a "data fog" that has plunged the Federal Reserve into a "blind flight" state before the December interest rate meeting, significantly increasing the uncertainty of policy decisions.

More fatal than short-term economic losses is the fact that the shutdown has added fuel to the fire of the US debt crisis. During the shutdown, the US government's daily debt increased by as much as 17 billion US dollars, pushing the total federal government debt to exceed the 38 trillion US dollar mark, reaching this milestone five years ahead of the previous forecast by the Congressional Budget Office. The out-of-control debt scale has directly pushed up the cost of debt repayment. The interest expense on US Treasury bonds is expected to reach 1.2 trillion US dollars in fiscal year 2025, accounting for more than 24% of fiscal revenue, which is equivalent to paying about 3.29 billion US dollars in interest every day. Interest expense has become a core fiscal burden on par with social security and medical insurance. This spiral of "high debt → high interest → even higher debt" is forming an irreversible vicious cycle: The Federal Reserve maintains high interest rates to curb inflation, further pushing up the cost of Treasury bond issuance. However, the government's fiscal expansion policy aimed at stimulating the economy has continuously increased the deficit scale, and fiscal and monetary policies have fallen into a serious opposition.

The downgrade of the credit rating has become a clear footnote to the fiscal predicament of the United States. Moody's had previously downgraded the US sovereign credit rating, clearly stating that the deteriorating trend of its fiscal indicators could no longer be offset by the economic and financial volume. Behind this rating adjustment lies the market's deep concern over the politicization of US debt management - the two parties have long used the debt ceiling as a political game tool, and this shutdown is the result of intensified differences. Moreover, the temporary appropriations bill only lasts until January 30, 2026, and the risk of another shutdown in the future remains unresolved. The relaxation of fiscal discipline caused by political polarization has raised doubts about the stability of US Treasury bonds, which were once the "global credit anchor" : Many Asian countries have continuously reduced their holdings of US Treasury bonds, and the global "de-dollarization" process has accelerated, further pushing up the financing cost of US Treasury bonds and creating a negative feedback loop of credit decline and debt increase.

In the long term, the US economy is trapped in an unsolvable "triple paradox" : it is difficult to balance the three goals of stimulating the economy through fiscal expansion, controlling inflation, and maintaining debt sustainability at the same time. The current ratio of US national debt to GDP has approached 100%. The Congressional Budget Office predicts that it will rise to a historical peak of 107% in 2029 and reach 166% in 2054. The huge debt scale not only squeeges the space for fiscal policy, making it difficult to effectively stimulate and offset the downside risks of the economy, but also will curb corporate investment and recruitment, dragging down the recovery of the labor market - the US consumer confidence index dropped to a low of 50.3 in November, and concerns in the job market have begun to spread.

The end of this government shutdown is merely a brief respite from the US debt predicament. To break the current deadlock, it is not only necessary for the two parties to abandon political self-interest and rebuild fiscal discipline, but also to find a difficult balance between fiscal austerity and economic growth. However, in the face of political polarization and the reality of prioritizing short-term interests, these reforms seem extremely difficult to move forward. In the future, the United States will not only have to deal with internal pressures such as the debt spiral and credit decline, but also confront external challenges from the adjustment of the global economic landscape. Its path to economic recovery is bound to be full of thorns, and the spillover effects of this debt predicament will continue to affect the stability and development of the global financial market.