September 29, 2025
The U.S. Congress has until midnight on Tuesday, September 30, to approve a funding bill and avoid a federal government shutdown that would begin on October 1, 2025.
Unlike previous shutdowns, this one comes at a more fragile time: economic growth has slowed, and unemployment rose to 4.3% in August—its highest level in nearly four years. This suggests a shutdown could hit harder than in past episodes.
Key Points
- Real but mostly temporary economic costs. As a reference, the 2018–2019 shutdown cost $11 billion in GDP, of which $3 billion was never recovered.
- Social Security, Medicare, and Medicaid payments continue (mandatory spending), though some administrative services may be delayed. (HHS.gov)
- In past shutdowns, hundreds of thousands of federal workers were furloughed without pay, and more than a million worked without pay until reopening (retroactive pay has been guaranteed by law since 2019). (Fed News Network)
- The Department of Health and Human Services (HHS) anticipates furloughing about 41% of its workforce (~32,460 employees) in a Fiscal Year 2026 shutdown. (Congress.gov)
- Emergency savings of 3–6 months remains the gold standard recommended by financial advisors to build resilience during uncertainty.
What Is a Government Shutdown and Why Does It Happen?
A government shutdown occurs when Congress fails to pass annual appropriations or a continuing resolution to keep funding going. Since 1976, there have been about 20 shutdowns or “funding gaps”; the longest lasted 35 days (Dec. 2018–Jan. 2019). (Nasdaq)
In the final week of the fiscal year, the Office of Management and Budget (OMB) instructed agencies to update contingency plans for a potential October 1 operations halt. Reports suggest a more aggressive stance on permanent cuts than in past shutdowns. (FEMA)
Key Differences in the 2025 Shutdown
Unlike prior episodes, media reports indicate the Administration is considering permanent layoffs (RIFs) in some programs—not just temporary furloughs. That would raise both economic and labor market uncertainty beyond prior shutdowns.
Economic Impact: How Much Does a Shutdown Cost?
The Immediate Cost
Shutdowns reduce activity while they last (unpaid employees, stalled contracts, tourism disruption). Most of the impact reverses after reopening, but permanent losses mount if the shutdown drags on. In 2019, the CBO estimated $11 billion in total losses, $3 billion permanent.
Lessons from the 2018–2019 Shutdown
- Lasted five weeks, cut GDP temporarily, left a net permanent loss.
- In 2013, ~800,000 employees were furloughed and ~1.3 million worked without known pay dates. S&P estimated a $24 billion impact and a ~0.6-point cut in Q4 2013 annualized GDP.(Kiplinger)
Why 2025 Is Different
This shutdown coincides with macroeconomic headwinds and risks of a data blackout that complicates Federal Reserve decisions.
Which Services Continue and Which Stop?
Services That Continue
- Social Security, Medicare, Medicaid (mandatory spending): benefits and provider payments continue; call centers and verification processes may be limited. (HHS.gov)
- National security, air traffic control, prisons, law enforcement: essential staff continue working without pay until reopening.
Services That Stop
- National Flood Insurance Program (NFIP): no new policies or renewals requiring active authorization, delaying mortgages tied to flood insurance. (TIME)
- National parks and museums: may close or operate with very limited services (no visitor centers, restrooms, campsites, reduced cleaning/rescue). Former NPS leaders have urged full closures for safety.
- Other areas: inspections, administrative hearings, and some federal loans usually stall.
Impact on Federal Workers
HHS expects to furlough ~32,460 employees (41% of staff) without appropriations. Others continue under mandatory or essential functions (working unpaid until reopening). Since 2019, law guarantees retroactive pay for furloughed employees. (Congress.gov)
How to Protect Your Finances During a Shutdown
- Build or Strengthen Your Emergency Fund
- Aim for 3–6 months of essential expenses in cash/high-liquidity accounts.
- Finhabits helps automate contributions toward your goal.
- Review and Adjust Your Budget
- Prioritize essentials; postpone discretionary spending.
- Emma, Finhabits’ 24/7 virtual planner, guides you in adjusting while keeping long-term goals in sight.
- Protect Your Investments
- A shutdown is a short-term political event; avoid impulsive moves if your portfolio is diversified.
- Finhabits automatically diversifies and rebalances portfolios.
- Consider an IRA or Rollover for 2025 Tax Benefits
- Contribution limits: $7,000 ($8,000 if age 50+).
- Roth IRA: taxed now, tax-free withdrawals later (income limits apply).
- Traditional IRA: tax-deductible contributions, taxes paid on withdrawal.
- Old 401(k)? Finhabits helps consolidate into a Rollover IRA for continued tax deferral and broad ETF diversification.
- Secure Financial Protection
- Adequate insurance shields income and assets from shocks.
- Finhabits lets you compare auto/home quotes in one place.
- Communicate with Creditors
- Request hardship relief (deferrals/modifications) if delays loom. Some credit unions offer 0% loans for furloughed workers.
- Avoid Major Financial Decisions
- Delay costly purchases or new debt during uncertainty.
Resources and Assistance
- For federal employees: unions, credit unions, and local programs (bridge loans, counseling).
- For the public: community groups and food banks often expand support during shutdowns.
Historical Perspective: Shutdown Lessons
- 1995–1996 (Clinton–Gingrich): two shutdowns, 26 days combined.
- 2013 (ACA): 16-day shutdown, 800k furloughed, 1.3M unpaid workers.
- 2018–2019: longest ever (35 days), partial, over border wall funding.
What Makes 2025 Different?
The mix of political tension, proposals for permanent staff cuts (RIFs), and a weaker labor market could make this shutdown more disruptive than the typically short-lived ones of the past.
Impact on Economic Data and the Fed
The Department of Labor has indicated that the Bureau of Labor Statistics (BLS) would halt data collection and publication during a shutdown. The September jobs report (scheduled for October 3, 2025) would not be released. This complicates Fed decision-making.
Market Reactions
Historically, markets react modestly: the S&P 500 often barely moves during a shutdown and is usually level or higher months later. Still, the absence of official data could heighten short-term volatility.
FAQs on the Government Shutdown
- Will my Social Security checks arrive?
Yes. Payments continue, though administrative requests (verification, history corrections, replacement cards) may be delayed. (Barron’s) - How will air travel be affected?
Air traffic controllers and TSA agents are essential and remain on duty, but absences and delays have occurred in long shutdowns. - Will national parks be open?
Varies. Many close or offer minimal services. Former NPS directors recommend closures for safety. - Can I still invest with Finhabits?
Yes. Finhabits Advisors LLC is SEC-registered and continues operating. - Does Finhabits offer insurance to help during uncertainty?
Yes. You can compare auto and home coverage through the platform.
Your Action Plan: Preparation Checklist
☐ Emergency fund: 3–6 months of expenses
☐ Budget review: delay non-essentials
☐ Diversified portfolio: avoid impulsive changes
☐ IRA or Rollover: consider 2025 benefits
☐ Insurance coverage: auto/home updated
☐ Creditor communication: if federal worker
☐ Emma planning: personalized adjustments
☐ Reliable updates: follow trusted sources (CBO, agencies, media)
Looking Ahead with Finhabits
More than 900,000 people have improved their financial habits with Finhabits, and over $400 million has been invested via the platform. Discipline and strategy work even in turbulent times.
Why Finhabits Is Your Best Ally in Uncertain Times
- Bilingual accessibility (English/Spanish)
- Emma 24/7: personalized guidance
- Automatic ETF diversification
- Transparent fees: $10/month under $12,000; 1.0% annual thereafter
- Security: SIPC protection up to $500,000
- Account options: Traditional IRA, Roth IRA, personal accounts
Conclusion: Preparation Is Power
The potential 2025 government shutdown presents challenges, but you can safeguard stability if you:
- Maintain 3–6 months of liquidity,
- Keep a diversified portfolio,
- Hold proper insurance,
- Make informed—not impulsive—decisions, and
- Seek guidance when needed.
Finhabits combines these tools to help you move forward confidently—regardless of what happens in Washington.
Sources & References
This article is based on verified information from:
- HHS.gov
- Fed News Network
- TIME
- Nasdaq
- Kiplinger
- CNN Business – Government Shutdowns Economic Impact (2025)
- CBS News – Government Shutdown Economic Impact (2025)
- Brookings Institution – Government Shutdowns Analysis (2025)
- Committee for a Responsible Federal Budget – Shutdown Q&A (2025)
- USAFacts – Government Shutdown 2025 Data
- NPR – Congressional Shutdown Coverage (2025)
- CNBC – Federal Government Shutdown Impact (2025)
- U.S. Office of Personnel Management – Furlough Guidance
- Bipartisan Policy Center – Shutdown Explainer
- U.S. News – Financial Preparation Guide (2025)
Disclaimer: This content is for educational purposes only and does not constitute financial, tax, or legal advice. Investing involves risk. Past performance is not indicative of future results. You may lose money.
