US Government Shutdown Could Drag On 'Five, Six Weeks,' Warns Moody's Economist Mark Zandi

Author: Rishabh Mishra | October 16, 2025 03:31am

Despite a last-minute Pentagon maneuver to ensure U.S. troops were paid this week, the federal government shutdown continues with no end in sight, prompting Moody’s Analytics Chief Economist Mark Zandi to warn that the impasse could still last for a record “five, six weeks.”

On The Shutdown’s End Game, ‘Something’s Got to Break”

Speaking on the Moody’s Talks – Inside Economics podcast, Zandi argued that while the temporary pay solution averted an immediate crisis, as per a Politico report, it only delayed an inevitable breaking point.

With no progress on a broader funding deal, Zandi believes the shutdown will persist until essential services fail. “If it’s more than a month, then it’s a deal,” Zandi stated. “Something is going to break.”

With key federal data releases on pause, we discuss how economists are relying on private data sources to gauge the health of the labor market.

We also dig into the federal government #shutdown. How long it could last, what's driving the stalemate, and the potential… pic.twitter.com/Dv1lMLmoxB

— Mark Zandi (@Markzandi) October 15, 2025

Shutdown ‘Could Get Ugly Really Fast’

While the impact of a short shutdown is minimal, fellow Moody's economist Brendan LaCerda cautioned that the consequences become “much more nonlinear after one month,” at which point the situation “could get ugly really fast.”

This includes disruptions to federal contractors, delayed welfare payments, and a sharp drop in consumer and investor confidence.

See Also: Scott Bessent Warns SEC Shutdown Is Halting Major IPOs, Poses ‘Serious National Security Issue’ For America

Data Blackout Leaves The Fed ‘Flying Blind’

The standoff is also creating a data blackout, preventing the release of key economic statistics. This leaves the Federal Reserve “flying blind” as it prepares for its late-October meeting to decide on interest rates, without official jobs or inflation reports to guide its decision.

The shutdown comes at a precarious time for the economy, with private data suggesting the labor market was already stalling before the government closed its doors.

The Senate blocked a House GOP government funding bill for the ninth time on Wednesday, extending the 15-day shutdown. The political gridlock remains centered on Democrats’ demands to extend Affordable Care Act (ACA) premium subsidies in any short-term funding bill, which Republicans have rejected in favor of a “clean” continuing resolution.

Price Action

The S&P 500 index ended 0.40% higher at 6,671.06 on Wednesday, whereas the Nasdaq 100 index advanced 0.68% to 24,745.36. On the other hand, Dow Jones fell 0.037% to 46,253.31.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Wednesday. The SPY was up 0.44% at $665.17, while the QQQ advanced 0.71% to $602.22, according to Benzinga Pro data.

On Thursday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading in a mixed manner.

Read Next:

• Scott Bessent Says Shutdown Has Started To Affect The Economy: ‘No Kings Means No Paychecks’

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo courtesy: Andrius Zemaitis / Shutterstock.com

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