The Government Shutdown's Resolution, Economic Impact & Construction Implications
- Ed Sullivan
- Nov 13, 2025
- 2 min read
Updated: Jan 7
Market Update: Breaking News
The 2025 federal government shutdown finally came to a close following passage of a bipartisan funding measure last night, November 12, 2025. The reopening agreement does not resolve issues relating to the Affordable Care Act that caused the shutdown, it merely postpones them. The agreement funds the government through January 30, 2026, setting up another potential spending confrontation early next year.
The rule of thumb is each week of shutdown reduces quarterly GDP growth by about 0.1 to 0.2 percentage points. Given the shutdown length (6.1 weeks) that implies a reduction GDP growth between 0.6% to 1.25%. The threatened government reduction in force (RIF) did not fully materialize. That wrinkle held the promise of a more significant adverse economic impact.
Much of the economic loss will be recaptured quickly. Federal employees will receive back pay and agency spending resumes – accounting for much of the economic loss. Most of the economic loss is expected to be recaptured during the fourth quarter 2025 and first quarter 2026.
Only lost consumption by furloughed workers, cancelled travel, delayed business activity, and halted federal procurement cannot be fully recovered. The overall permanent loss to the economy that will not be recouped is estimated at 0.1% to 0.2% from economic growth.
The shutdown disrupted the timing of construction activity, not necessarily the longer-term level of activity. Federal agencies, for example, could not issue new contracts, release grants, or process environmental and engineering reviews. Since states rely heavily on federal reimbursements, some of their bid letting and project timing were also disrupted. These factors could push volumes of certain construction work from 2025 to 2026. From a longer-term perspective, little permanent adverse impact is expected to be felt by the construction industry.
About The Sullivan Report
The Sullivan Report delivers subscription-based economic forecasts, news, and market updates tailored to the cement, concrete, construction, and building materials industries. Its flagship publication, the Cement Outlook, is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape.
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