Analysis: 2025 government shutdown ends

On November 12th, President Donald Trump signed legislation reopening the government, ending the longest shutdown in U.S. history at 44 days. The bill secures funding through January 30th and continues fiscal 2026 funding for the Agriculture Department, military construction, and the legislative branch. Eight Democrats joined 52 Republicans to reach the Senate’s 60-vote passage threshold, while the House approved the measure by a 222-209 margin.

Lawmakers had initially failed to reach a spending deal, triggering the 11th government shutdown since 1980. The shutdown disrupted government operations, but essential services—including the postal service, social security and Medicare payments, air travel, and the military—continued to function. Funding challenges for the Department of Agriculture’s Supplemental Nutritional Assistance Program (SNAP) and air traffic cuts due to controller shortages increased political pressure on Congress to reach a compromise.

Congress sets the federal budget annually to keep the government running. The House passes legislation with a simple majority, while the Senate requires 60 votes to end debate and approve bills, often blocking controversial measures. Only the 94th and 95th Congresses have held 60 or more Senate seats in a single party. Congress rarely shuts down the government, and most shutdowns last only hours or days. However, three shutdowns in the past 40 years have continued for weeks, including the 35-day shutdown in 2018/2019.

What are the political realities of the government’s shutdown and reopening, and how might it impact the economy and investment markets?

Reopening the federal government

The legislation funds the government through January 30th, setting up another potential shutdown in the new year. Amendments to the bill maintain full fiscal 2026 funding for programs like SNAP, military construction, the Food and Drug Administration, and Veterans Affairs, easing some pressure points. The bill also reverses mass firings and provides back pay to all federal workers.

The shutdown, which lasted nearly half of the fourth quarter, will weigh on the economy, though recent data still show positive growth. Restoring jobs and back pay, along with the One Big Beautiful Bill Act’s consumer tax cut benefit, should boost the economy early in 2026. However, Federal agencies missed economic data collection in October and early November, posing a challenge for recovery.

The Bureau of Economic Analysis (BEA) and Bureau of Labor Statistics (BLS) halted economic data releases during the shutdown, except for the September Consumer Price Index. The work stoppage affected both data collection and publication. After missing October, agencies may struggle to catch up. The BEA may release September employment data soon after reopening, and both agencies could collect enough data in November for December updates. However, October data remains uncertain, and markets await agency updates.

During the shutdown, investors relied on private data sources to gauge business activity, including employment data from ADP and Challenger, consumer spending from Johnson Redbook, and business surveys from S&P Global and the Institute for Supply Management. These sources indicate some uncertainty but spending and activity remain consistent with pre-shutdown levels.

Federal government shutdown precedents

Over the past 45 years, the federal government has partially shut down 11 times. Between 1980 and 1986, four shutdowns lasted only one day, while three others ended in 3-5 days. Since 1995, four government shutdowns, including this latest one, have extended for weeks.

Source: U.S. Bank Asset Management Group Research. 

Market considerations

Investors worry most about extended government shutdown’s economic and market impact. “Although furloughed and unpaid employees experience the most hardship in the short-term, past shutdowns haven’t had a broad economic impact,” notes Rob Haworth, senior investment strategy director at U.S. Bank Asset Management Group. “Investors generally don’t consider a temporary decline in economic activity a major concern, and the economy often recovers in the subsequent quarter.”

Haworth says it’s unclear whether investors should expect a notable market reaction to a federal government shutdown, even an extended one. “The limited history of shutdowns indicates no definitive market reaction to these events, either when the market anticipates it, during the shutdown, or after Congress resolves it,” says Haworth.

Source: U.S. Bank Asset Management Group Research. *Data through 11/12/25.

In three extended shutdowns, markets performed positively both during the shutdown and immediately after its conclusion. In two of the three instances (1995 and 2013), markets also performed positively in the months leading up to the shutdown. In 2018, markets fell prior to the shutdown, but other factors, including the Federal Reserve’s decision to hike short-term interest rates during that period, contributed to the decline.

“Many issues impact markets, even during stressful times like government shutdowns,” says Haworth. “Ultimately, investors focus on more important fundamental factors such as corporate earnings and market valuations.” To the extent the shutdown doesn’t affect corporate fundamentals, Haworth expects little market reaction.

Keeping your investment strategy on track

While political issues like a debt ceiling dispute, a federal government budget impasse or a national election can garner significant headlines, investors should remain focused on their long-term objectives and avoid distractions. Talk with your wealth professional to ensure your portfolio remains properly positioned to meet your long-term goals.