The U.S. government shutdown has entered its second week, with the economic impact continuing to spread.

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The U.S. government shutdown has entered its second week with no sign of resolution, and the economic impact is spreading from initial localized effects to broader sectors. According to media reports on Friday, government functions such as air travel, taxpayer services, and national parks are under pressure first, and some agencies are only dealing with emergencies to save funds.

Over 250,000 federal employees did not receive their paychecks on time this week, and another 2 million are expected to face the same dilemma next week. The Pentagon's next scheduled military payroll on October 15 may become a political focal point, marking the first time in decades that the military faces the risk of unpaid wages.

Economists estimate that each week of the shutdown will reduce U.S. GDP by 0.1 to 0.2 percentage points. Since government data releases have largely come to a halt, this impact is further magnified. The Federal Reserve and private forecasting institutions are facing an information blackout.

Unlike previous shutdowns, the Trump administration has adopted a new legal interpretation to rewrite response strategies, attempting to maintain funding for Republican priorities while increasing the impact on federal employees in Democratic districts.

Service Interruptions Widen

Air travel has become the most visibly affected area. From Dallas to Chicago to Washington, D.C., airports are experiencing flight delays due to insufficient air traffic controllers.

Transportation Secretary Sean Duffy stated that staff shortages usually only cause about 5% of delays, but currently more than half of all flight delays are being caused by this. The U.S. Travel Association estimates a weekly loss of $1 billion in expenditures.

After the IRS ran out of carryover funds, it cut nearly half of its staff, significantly reducing taxpayer services. About 34,000 employees were forced to take leave this week, while the remaining 40,000 continue preparations for next year’s tax season and implementation of Trump's new tax law. The Taxpayer Advocate Service is completely closed.

The $8 billion Women, Infants, and Children Nutrition Program is operating on just $150 million in emergency funds, which are running out soon. The White House states it will use tariff revenue to support this program, but has not specified how or when this will be done. Funding for the Supplemental Nutrition Assistance Program, serving 41 million Americans, will only last until the end of October.

Agencies Adopt "Rolling Shutdown" Strategy

After the 35-day shutdown in 2019, the Government Accountability Office criticized the Trump administration for failing to prepare for prolonged funding interruptions. In this shutdown, some agencies are recalling or dismissing employees as needed, trying to balance conflicting legal requirements.

Justice Department lawyers are forced on leave during case suspensions but are recalled if judges deny case delays. IRS employees may also return to work as tax season approaches.

Some agencies are using special funds from last year that haven't expired to circumvent the Antideficiency Act, but these resources are quickly running out. According to the EPA's largest union, the agency began sending furlough notices starting Wednesday evening. The EPA’s emergency plan calls for nearly 90% of employees to be furloughed after funding lapses, with most enforcement and permit activities halted.

The Department of Homeland Security is preparing for a prolonged funding lapse and plans to recall nearly 1,800 employees in the second week, primarily involving senior management, Coast Guard, and Customs and Border Protection staff.

Economic Data Releases Disrupted

Widespread interruption of government data releases is exacerbating the shutdown's economic impact. The Bureau of Labor Statistics postponed last week’s jobs report but recalled employees to prepare the latest Consumer Price Index.

Census Bureau reports on retail sales, housing starts, and business inventories face delay risks. The Bureau of Economic Analysis has suspended operations, and the initially scheduled release of third-quarter GDP data on October 30 could be affected. Without this official data, the Federal Reserve and private forecasting institutions are left to make decisions blindly.

This official data is crucial for the federal government's annual inflation adjustments, including cost-of-living increases, tax brackets, loan subsidies, and cost-benefit analyses of federal programs.

Though federal employees are likely to receive back pay after the shutdown ends, which could help alleviate some economic effects, Trump has questioned whether all federal workers would get full compensation, and has threatened to fire thousands of federal employees, leading to uncertainty on the economic rebound.

Political Maneuvering Becomes More Distinct

Historically, the increasingly severe impact on travelers, taxpayers, and the military has usually pushed Congress to break deadlocks and approve new funding arrangements. In 2019, airport chaos forced the White House to reach a deal after 35 days.

This time, Trump and his Republican allies believe they have the upper hand. The administration is trying to increase the impact on Democratic districts—threatening to fire thousands of federal employees who live and work in those areas while maintaining funding for Republican priorities such as immigration enforcement.

The White House said last week it would conduct large-scale layoffs "within two days, soon, very soon," but these measures haven’t yet materialized. If implemented, the layoffs could put additional pressure on agencies that had already reduced staff earlier this year due to government efficiency initiatives.

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