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The economic consequences of the current federal government shutdown hinge critically on how long it lasts. If it is resolved quickly, the costs will be small, but if it drags on, it could send the U.S. economy into a tailspin. Thats because the economy is already in a precarious state, with the labor market struggling, consumers losing confidence and uncertainty mounting. As an economist who studies public finance, I closely follow how government policies affect the economy. Let me explain how a prolonged shutdown could affect the economyand why it could be a tipping point to recession. Direct impacts from a government shutdown The partial government shutdown began on Oct. 1, 2025, as Democrats and Republicans failed to reach a deal on funding some portion of the federal government. A partial shutdown means that some funding bills have been approved, entitlement spending continues since it does not rely on annual appropriations, and some workers are deemed necessary and stay on the job unpaid. While most of the 20 shutdowns that occurred from 1976 through 2024 lasted only a few days to a week, there are signs the current one may not be resolved so quickly. The economy would definitely take a direct hit to gross domestic product from a lengthy shutdown, but its the indirect impacts that could be more harmful. The most recent shutdown, which extended over the 20182019 winter holidays and lasted 35 days, was the longest in U.S. history. After it ended, the Congressional Budget Office estimated the partial shutdown delayed approximately US$18 billion in federal discretionary spending, which translated into an $11 billion reduction in real GDP. Most of that lost output was made up later once the shutdown ended, the CBO noted. It is estimated that the permanent losses were about $3 billiona drop in the bucket for the $30 trillion U.S. economy. GREAT FALLS, MARYLAND – OCTOBER 02: The closed visitor center at the Chesapeake and Ohio Canal National Historic Park is seen on the second day of the federal government shutdown on October 02, 2025 in Great Falls, Maryland. National parks are remaining partially open and with limited services during the shutdown. The U.S. federal government shut down much of it’s operations on Wednesday after Congress failed to pass a bipartisan funding bill. [Photo: Kevin Dietsch/Getty Images] The indirect and more lasting impacts The full impact may depend to a large extent on the psychology of the average consumer. Recent data suggests that consumer confidence is falling as the stagnation in the labor market becomes more clear. Business confidence has been mixed as the manufacturing index continues to indicate the sector is in contraction, while other business confidence measures indicate mixed expectations about the future. If the shutdown drags on, the psychological effects may lead to a larger loss of confidence among consumers and businesses. Given that consumer spending accounts for 70% of economic activity, a fall in consumer confidence could signal a turning point in the economy. These indirect effects are in addition to the direct impact of lost income for federal workers and those that operate on federal contracts, which leads to reductions in consumption and production. The risk of significant government layoffs, beyond the usual furloughs, could deepen the economic damage. Extensive layoffs would shift the losses from a temporary delay to a more permanent loss of income and human capital, reducing aggregate demand and potentially increasing unemployment spillovers into the private sector. In short, while shutdowns that end quickly tend to inflict modest, mostly recoverable losses, a protracted shutdownespecially one involving layoffs of a significant number of government workerscould inflict larger, lasting impacts on the economy. US economy is already in distress This is all occurring as the U.S. labor market is flashing warnings. Payrolls grew by only 22,000 in August, with July and June estimates revised down by 21,000. This follows payroll growth of only 73,000 in July, with May and June estimates revised down by 258,000. In addition, preliminary annual revisions to the employment data show the economy gained 911,000 fewer jobs in the previous year than had been reported. Long-term unemployment is also rising, with 1.8 million people out of work for more than 27 weeksnearly a quarter of the total number of unemployed individuals. At the same time, AI adoption and cost-cutting could further reduce labor demand, while an aging workforce and lower immigration shrink labor supply. Fed Chair Jerome Powell refers to this as a curious kind of balance in the labor market. In other words, the job market appears to have come to a screeching halt, making it ifficult for recent graduates to find work. Recent graduate unemploymentthat is, those who are 22 to 27 years oldis now 5.3% relative to the total unemployment rate of 4.3%. The latest data from the ADP employment report, which measures only private company data, shows that the economy lost 32,000 jobs in September. Thats the biggest decline in 2 years. While thats worrying, economists like me usually wait for the official Bureau of Labor Statistics numbers to come out to confirm the accuracy of the payroll processing firms report. The government data that was supposed to come out on Oct. 3 might have offered a possible counterpoint to the bad ADP news, but due to the shutdown BLS will not be releasing the report. Problems Fed rate cuts cant fix This will only increase the uncertainty surrounding the health of the U.S. economy. And it adds to the uncertainty created by on-again, off-again tariffs as well as the newly imposed tariffs on lumber, furniture and other goods. Against this backdrop, the Fed is expected to lower interest rates at least two more times this year to stimulate consumer and business spending following its September quarter-point cut. This raises the risk of reigniting inflation, but the cooling labor market is a more immediate concern for the Fed. While lower short-term rates may help at the margin, I believe they cannot resolve the deeper challenges, such as massive government deficits and debt, tight household budgets, a housing affordability crisis and a shrinking labor force. The question now is not will the Fed cut rates, because it likely will, but whether that cut will help, particularly if the shutdown lasts weeks or more. Monetary policy alone cannot overcome the uncertainty created by tariffs, the lack of fiscal restraint, companies focused on cutting costs by replacing people with technology, the impact of the shutdown and the fears of consumers about the future. Lower interest rates may buy time, but they wont solve these structural problems facing the U.S. economy. John W. Diamond is the director of the Center for Public Finance at the Baker Institute at Rice University. This article is republished from The Conversation under a Creative Commons license. Read the original article.
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A comedy festival in the capital of Saudi Arabia has provided golden material for comedians who declined the offer on principleor wouldve done, if theyd received an invite in the first place. The debut Riyadh Comedy Festival, running Sept. 26 to Oct. 9, bills itself as the biggest comedy festival in the world. In the line up of more than 50 comedians, some like Bill Burr and Pete Davidson, whose firefighter father was killed in the 9/11 attacks, came as a shock and disappointment to fans. The irony is also not lost that many of these same comics, who have publicly railed against cancel culture and preached about freedom of speech, sold out to a regime that allegedly provided a list of deal terms for appearing at the event, including forbidding any criticism of religion or the Saudi royals. Online, fellow comedians quickly jumped on the bit. Sometimes in order to fight the power, you need to be paid by the power, quipped comedian Vinny Thomas, who often goes viral for his social media skits. New York-based comedian Gianmarco Soresi wrote on X: If you do the Riyadh Comedy Festival and dont tell a joke that gets you imprisoned by the monarchy then what was even the point of having Trump on your podcast? Shaan Baig, who regularly posts impressions on TikTok, offered one of comedian Aziz Ansari. At first I was like oh noooo, he says. But then they showed me the money and I was like, um, who cares about dead journalists? Get me to the desert. Representatives for Ansari, Burr, and Davidson did not respond to request for comment at the time of publication. Marc Maron, host of the WTF podcast, joked that it was easy for him to take the high road on this one given he was not asked to perform. He also questioned how the festival would be promoted. From the folks that brought you 9/11, he riffed in a stand-up bit posted to Instagram last week. Two weeks of laughter in the desert, dont miss it. Jokes aside, Human Rights Watch called on the performers who chose to partake to publicly urge Saudi authorities to free unjustly detained Saudi dissidents, journalists, and human rights activists, suggesting that the Saudi government is using the festival to deflect attention from its brutal repression of free speech and other pervasive human rights violations. But, as comedian Zach Woods said on Instagram: Name one comedian who hasnt whored themself out to a dictator.
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Below, Michelle MACE Curran shares five key insights from her new book, The Flipside: How to Invert Your Perspective and Turn Fear into Your Superpower. Michelle spent over a decade as a fighter pilot and served as the Lead Solo Pilot for the Thunderbirds, the U.S. Air Forces elite demonstration team. She has nearly 2,000 hours of F-16 flying time and flew combat missions in Afghanistan. Known for her upside-down maneuvers, she has inspired audiences at airshows and flyovers like the Super Bowl, Daytona 500, and Indy 500. Whats the big idea? Mace spent years operating in high-pressure environments, from combat situations to performing high-speed maneuvers in front of millions of people. But what also came with that career were the moments behind the scenes of self-doubt, the struggle to find her identity, the near misses, and the mental battles that came with the job. Much of what she learned to persevere and triumph as a fighter pilot applies to winning at life. 1. Your inner critic is just a voice, not a verdict. When I was a young, inexperienced fighter pilot, I lived with this constant fear that I didnt belong and wasnt good enough. Id walk into a briefing room and feel like everyone else had it together. Meanwhile, I was hyperaware of everything I said and did as I tried to live up to my idea of what the perfect fighter pilot was. This voice lives in all of usthat inner critictelling you that youre not ready, not enough, or dont have what it takes. It may sound a whole lot like the truth, but that voice is often just fear in disguise: fear of being seen, fear of failing, or fear of finally succeeding and not knowing what to do with it. I had to learn that my inner critic wasnt a signal to stop. It didnt mean I was in the wrong place. It was a sign that I was pushing into something that matteredsomething that was difficult, but worth doing. I used to think that courage would show up, make me feel ready, and then Id act. But courage comes after the action. So, when that inner critic chimes in, pause, acknowledge it, and then take one small, bold step despite it. Courage isnt the absence of doubt. Its action in the presence of it. It was a sign that I was pushing into something that matteredsomething that was difficult, but worth doing. I didnt get rid of my inner critic. I just stopped letting it drive. Even now, it still shows up before big decisions or at the start of new chapters, but Ive learned to recognize its tone. Its never curious. Its never kind. It always speaks in absolutes: youll never, you cant, you shouldnt. When I hear that voice now, I take it as a clue, not a command. Its a sign that Im stretching into something that matters. 2. One minute, one hour, one month. During an airshow in Columbia, I was flying my Thunderbird jet at 400 miles per hour, just a couple of thousand feet above a forest. Suddenly, I saw a flash of light, heard a loud thud, and felt the jet shake. I had just hit a bird. Later, Id find out it was a vulture with a six-foot wingspan, but in that moment, all I knew was that this was serious. I didnt know how bad the damage was. Was the engine okay? Would the aircraft keep flying? My adrenaline spiked, but I didnt panic. I fell back on a mental checklist that we drilled from day one in training: Maintain aircraft control (dont make it worse). Analyze the situation (what do I know?). Take proper action (what can I do about it?). First, I focused on flying the jet, checking my instruments, and communicating with the rest of the team. Not fixing, but assessing, then acting. I still use that same process when things go sideways in life, but I translate it like this: What do I need to do in the next one minute, one hour, and one month? One minute: pause, breathe. Just let yourself feel it. Ground yourself in your body. One hour: analyze, gather facts. Get support. One month: adjust your habits, actions, and mindset. Whether its a breakup, a layoff, or a deal falling through, you dont need to solve everything all at once. When a bird hits your jet or life just hits you hard, start with the next minute because how you respond in small windows determines how you navigate the big ones. That bird strike could have gone very differently. If I had let panic set the tempo, I could have turned a bad moment into a catastrophic one, and I think we do that in life, too. We try to sprint through things that need a steady walk. When something goes wrong, dont just ask, What should I do? Ask what matters most in this moment? What can wait, and what can I shift long-term? Thats how you lead yourself through pressurenot perfectly, but with purpose. 3. Wiggle your toes. Air refueling is when one airplane takes gas from another while flying alongside each other at over 300 miles per hour, thousands of feet in the air. It is a skill that requires practice and finesse, and it is stressful to learn. As a newbie pilot with little experience attempting this task, I was tense. My hand was going numb and I was gripping the stick like it owed me money, and every time I got close to the position where our airplanes would actually touch, Id overcorrect, become unstable, and be told to back up and try again. After one particularly bad flight, my instructor gave me this piece of advice: Mace, when you get close, dont forget to wiggle your toes. It sounded silly considering we were trained combat pilots flying $30 million aircraft, but on the next flight, I gave it a try. As I felt the stress build, I consciously moved my toes inside my boots, and it worked. That tiny movement disrupted the tension in my body. It made me breathe, relax, and refocus. When pressure rises, your instinct might be to grip tighter, but sometimes the best move is to loosen your hold. Wiggling my toes became a ritual, and not just in the jet, but anytime. Stress made me want to control everything too tightly. When pressure rises, your instinct might be to grip tighter, but sometimes the best move is to loosen your hold. Try wiggling your toes. Its a physical disruptor. It breaks the stress spiral. It buys you a moment to respond with intention instead of reacting under duress, and sometimes thats all you need to regain control, not by force, but by presence. 4. Call signs are earned, not chosen. In the fighter pilot world, we have nicknames that we refer to as call signs, and you do not get to pick yours. Its given to you, usually after a mistake you made as a young pilot. Mine came during basic fighter maneuvering. I got so focused on the wrong thing that I accidentally broke the sound barrierI was supersonic when I wasnt supposed to be, and didnt even realize it. I didnt even understand what had happened until after we landed and watched the cockpit recordings during our debrief. Not long after, I was officially named Mace (an acronym for MACH at circle entry). This wasnt a compliment. It was a reminder of a rookie mistake, and I onestly felt a lot of shame around it. Then I thought about how every single pilot in my unit had a call sign, even the most respected, the best, the most experienced. I realized that when youre doing something hard, no one gets by unscathed, and it wasnt perfection that led to success, but persistence. Our identities are often shaped by how we recover from missteps, not how we avoid them. That moment became part of my growth. I eventually owned it. I learned from it, and I flew smarter because of it. You might not get to control how every chapter of your story starts, but you do get to decide how it ends. I used to carry so much shame around that call sign, but then I realized it meant I was in the game. You dont get a call sign if youre sitting on the sidelines. You get one by showing up, getting it, and still coming back for more. All the people I looked up to had a moment theyd rather forget. Confidence doesnt come from never falling. It comes from proving to yourself that you can rise after you do. 5. Whats your go/no-go criteria? In aviation, we use the concept of go/no-go decisions. This is something you decide before the mission ever begins, not when things are falling apart. Before every flight, especially ones that push limits, you set your criteria. If the weather drops below a certain level, no go. If fuel hits this mark, go home. If the system isnt functioning, abort the mission. Why? Because once youre in the air, the variables increase, and so does the pressure. Youre emotionally invested, and thats when people make poor decisions. They press forward toward an objective and into danger because theyre already in motion. A great example from mountaineering is summit fever, when a team pushes ahead because that summit is so close, even though theyve already passed their turnaround time. Go/no-go keeps you honest and calm so that when chaos hits, you dont have to figure it out. You just follow the plan. Youre emotionally invested, and thats when people make poor decisions. Ive used this concept in my personal life. Whether business, relationships, or big goals, I try to set my limits and values before investing time, money, and energy. What am I willing to compromise on? When will I walk away or shift course? This is where the sunk cost fallacy kicks in. We tell ourselves that weve already come this far and invested too much to quit now, but that logic traps us in bad decisions. The time, energy, or money youve already spent is gone. What matters is whether continuing is still aligned with your values, safety, and mission. Go/no-go protects you from doubling down just to justify your investment. It gives you a way to honor your effort without letting it dictate your future so that when things deviate from the plan, you dont have to scramble to find clarity. Bold doesnt mean reckless, and quitting isnt the same as failing. Draw those go/no go lines before you need them because decisions made in calm are what guides you in chaos. This article originally appeared in Next Big Idea Club magazine and is reprinted with permission.
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