Happy New Year! There’s now less than a month until the next potential government shutdown

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The turn of a New Year can represent many things: A fresh outlook, healthier habits, and goals to work toward. But entering January also marks a threshold: The looming government shutdown is only a matter of weeks away.

In November, the U.S. government experienced its longest shutdown in history after Republicans and Democrats took 43 days to agree on new funding arrangements for the likes of SNAP food aid, the Department of Agriculture, Congress, and veterans affairs through September next year. Unfortunately, it didn’t get to the rest of government, where coffers will run dry come January 30.

When Congress broke for Christmas a fortnight ago, it had not come close to agreeing on a deal to fund the majority of its federal departments, as well as the imminent expiration of additional programs such as the National Flood Insurance Program Authorization and Medicare and health care extenders.

Optimists might argue that with four weeks to the day until the shutdown, a change of tone has already been observed. For example, Senate Minority Leader Chuck Schumer told reporters before the holidays that he and Senate Majority Leader John Thune were going to “work through the process and get the appropriations bills done.”

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While the political will to avert another shutdown appears to be strong among some key figures, the question of compromise will become all the more important as a deadline approaches. Here, President Trump has been firm. When signing the funding deal back in November, Trump said: “We’re sending a clear message that we will never give in to extortion”.

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As RSM’s Chief Economist, Joe Brusuelas, pointed out in a note last week, the fallout from the most recent shutdown hasn’t yet been realised: The longest government shutdown in American history will most likely provide a drag of close to 1.5% on overall economic activity during the October to December period, which will set up for a soft growth estimate for the final quarter.”

That being said, the outlook for 2026 (notwithstanding another potential shutdown) is relatively rosy, he added: “The shape of things in 2026 are coalescing. Large tax cuts and the full expensing of capital investments will fuel growth well above the 1.8% long-term trend” which will result in month job creation of between 20,000 and 50,000 positions per month on average.

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