US Government Shutdown Drags on Economy

- The current partial shutdown, which began on February 14, 2026, is the second this year and is exclusively focused on the Department of Homeland Security (DHS). It follows a wider, four-day shutdown from January 31 to February 3 that involved about half of all federal departments. - The political stalemate is rooted in a dispute over reforms to federal immigration enforcement, with Senate Democrats withholding support for the DHS funding bill until enforceable limits on Customs and Border Protection (CBP) are included. - The recent 43-day shutdown in late 2025, the longest in U.S. history, subtracted an estimated one percentage point from fourth-quarter GDP growth. For comparison, the 35-day shutdown of 2018-19 resulted in a permanent economic loss of $3 billion. - Supply chains are particularly vulnerable to backlogs, as even with essential personnel on duty, a lack of full staffing can slow down customs clearances and inspections. During the 2018-19 shutdown, shipment dwell times at the Port of Los Angeles-Long Beach rose by 15-20%. - The economic uncertainty has impacted consumer behavior, with consumer spending growth slowing to a 2.4% annual rate in the fourth quarter, down from 3.5% in the third quarter. - Consumer confidence has fallen sharply, with The Conference Board's index plunging in January 2026 to its lowest point since 2014. During the prior shutdown, a University of Michigan survey saw confidence drop to its lowest level since June 2022. - The Small Business Administration (SBA) is unable to process new loan applications during a shutdown, which has previously cut off access to an estimated $170 million in daily funding for small businesses.