The Shutdown’s Economic Impact

Exchanges

Goldman Sachs

Business

4.4 • 1K Ratings

🗓️ 8 October 2025

⏱️ 19 minutes

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Summary

How long could the US government shutdown last — and what will that ultimately mean for the US economy? Goldman Sachs Research’s Alec Phillips, chief US political economist, explores the potential impact on economies and markets. This episode was recorded on October 7, 2025. The opinions and views expressed herein are as of the date of publication, subject to change without notice, and may not necessarily reflect the institutional views of Goldman Sachs or its affiliates. The material provided is intended for informational purposes only, and does not constitute investment advice, a recommendation from any Goldman Sachs entity to take any particular action, or an offer or solicitation to purchase or sell any securities or financial products. This material may contain forward-looking statements. Past performance is not indicative of future results. Neither Goldman Sachs nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the statements or information contained herein and disclaim any liability whatsoever for reliance on such information for any purpose. Each name of a third-party organization mentioned is the property of the company to which it relates, is used here strictly for informational and identification purposes only and is not used to imply any ownership or license rights between any such company and Goldman Sachs. A transcript is provided for convenience and may differ from the original video or audio content. Goldman Sachs is not responsible for any errors in the transcript. This material should not be copied, distributed, published, or reproduced in whole or in part or disclosed by any recipient to any other person without the express written consent of Goldman Sachs. Disclosures applicable to research with respect to issuers, if any, mentioned herein are available through your Goldman Sachs representative or at http://www.gs.com/research/hedge.html. Goldman Sachs does not endorse any candidate or any political party. © 2025 Goldman Sachs. All rights reserved. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	How long could the U.S. government shut down last and what will that ultimately mean for the U.S. economy?
0:11.0	I'm Allison Nathan and this is Goldman Sachs exchanges.
0:16.4	Today I'm joined by Alec Phillips, our chief political economist here in Goldman Sachs research.
0:22.5	Alec, welcome back to the program. Thanks for having me. And you're doing this on very short notice, so we appreciate that. Yep. I feel like you've been here a lot, honestly, this year. It's been a busy year. There's been a lot going on. Yep. But today, we're going to talk about what's very topical, the government shut down. What's not going on?
0:36.6	Yeah, exactly.
0:37.6	Exactly, the government.
0:38.6	Look, I want to start with a little perspective. what's very topical, the government shut down. What's not going on? Yeah, exactly.
0:38.5	Exactly, the government.
0:40.6	Look, I want to start with a little perspective.
0:46.4	Obviously, shutdowns are still somewhat unusual, but they aren't unprecedented by any means.
0:49.4	So what makes this shutdown different from others?
0:56.2	The most important difference is that the sort of the party situations are reversed. So in the previous shutdowns that we think of as being long disruptive shutdowns, we had one in 1995, one that
1:02.8	straddled 95, 96, 2013, 2018, 19. In those cases, you had Republicans looking for something and using the shutdown as leverage.
1:16.1	And Democrats, more often than not in the White House, 2018, 19, President Trump was in the
1:21.8	White House. But at that point, it was actually, funny enough, Republicans who were looking for
1:26.1	something, and they hadn't gotten it through the appropriations process.
1:30.5	This time, I think if you look at the question of who is supporting a clean extension of spending authority,
1:37.0	it's Republicans supporting it, Democrats not supporting it, what they want extension of health insurance subsidies is the main thing.
1:44.6	And so that's very different.
1:46.8	What is the same is that you have a lot of furloughed workers, a lot of various services interrupted.
1:55.8	I'd say compared to those prior shutdowns, overall, it looks like this is actually going to be,
2:03.3	in some ways, broader for longer than we've, I think I'm right in saying, probably than we've
	...

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