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US Government Shutdown Ends After Record 43 Days

The U.S. government shutdown, which lasted 43 days starting in early October 2025, finally ended following a congressional vote on November 12, marking the longest shutdown in U.S. history. The closure delayed the release of key data for October and early November, including employment, inflation (CPI, PPI), and consumer spending. Market expectations for annual GDP growth have been slightly revised down from 0.8% to 0.7%. According to the White House Council of Economic Advisers, consumer spending in October alone dropped by about USD 30 billion due to the shutdown, while the unemployment rate may temporarily rise from 4.3% to 4.8%. The shutdown stemmed from deep partisan divisions over the FY2025 budget bill, with disputes centering on Medicaid funding, border policy, and spending cuts. During the shutdown, business activity slowed and federal employee pay was suspended, putting pressure on consumption, the service sector, and financial markets. Budget freezes in several departments also led to flight delays and postponed food inspections, causing tangible disruptions to daily life. With Congress reaching an agreement, federal agencies are expected to gradually resume operations, and delayed economic data will be released in the near term. In the short run, as some fiscal disputes remain unresolved, markets are likely to stay cautious toward federal policy, with business investment and export growth expected to ease to around 0.7%. Over the medium term, as long as fiscal gridlock does not recur, economic activity is expected to regain momentum, and markets will closely monitor future developments in taxation and healthcare policy.

Deep Dive into the Short-Term Market Turbulence from the US Government Shutdown

As of early November 2025, the U.S. government shutdown has lasted for more than 40 days, marking the longest in history and triggering significant market volatility. Over the past week, the S&P 500 Index fell by about 1.6%, while the Nasdaq Composite dropped 3%, recording its steepest weekly decline since April. The slump reflects a clear decline in investor risk appetite. The shutdown stemmed from Congress’s failure to pass annual appropriations bills on time, and deepening political divisions have further heightened market uncertainty. Investor confidence has weakened, and the high valuations of tech stocks have led to particularly poor performance in the Nasdaq. Meanwhile, tightening liquidity in the Treasury’s cash accounts has added pressure to overall market funding conditions. However, a recent bipartisan agreement in the Senate to extend government funding through the end of January 2026 has helped avert a more severe crisis, slightly easing short-term market concerns. Historical data suggest that if a shutdown ends within a few weeks, the stock market typically rebounds quickly; a prolonged one, however, could dampen corporate investment sentiment. With signs of a gradual government restart emerging, expectations for market stabilization have increased. In the short term, if the shutdown crisis is resolved, market confidence is expected to recover gradually, potentially driving a rebound in equities. Nonetheless, lingering political divisions and economic uncertainties continue to pose risks of volatility. Medium-term focus will be on the progress of budget negotiations and the recovery of economic indicators. Investors should remain cautious about the potential drag of the shutdown on corporate earnings and consumer confidence, while also monitoring the implications of the U.S. debt and fiscal deficit. Overall, once the government fully reopens, market performance will rely more on fundamental factors, with volatility likely to gradually subside.

Supreme Court Scrutinizes Legality of Trump Tariffs, Igniting U.S. Trade Policy Turmoil

On November 5, 2025, the US Supreme Court held nearly three hours of oral arguments over the tariffs imposed by the Trump administration under the International Emergency Economic Powers Act (IEEPA), far exceeding the scheduled time and underscoring the complexity of the case. The effective tariff rate announced for September 2025 stood at about 22.25%, while actual tariff revenue in October declined to around 11.28%. The annual growth rate of the US goods trade deficit had once surged to 67.5%, but has since slowed notably as trade tensions intensified, signaling that the market is entering another period of volatility. During the hearing, several justices questioned whether Trump exceeded presidential authority by invoking IEEPA to levy broad, global tariffs, as the statute does not explicitly grant such tariff-imposing powers. Both conservative and liberal justices expressed skepticism about the measure’s constitutionality. Should the ruling go against the Trump administration, portions of the tariffs may need to be withdrawn or reassigned to other legal bases. This judicial uncertainty is influencing corporate investment decisions and market expectations, heightening the demand for clearer trade policy direction among businesses and investors. The Supreme Court is expected to issue a decision within the next few weeks, determining whether the large-scale tariff framework introduced under Trump can remain in place. If the tariffs are overturned, corporate costs and consumer prices could ease, potentially supporting retail and manufacturing stocks. Conversely, if the tariffs are upheld, supply chain disruptions and inflationary pressures are likely to persist. In the medium term, the ruling will redefine the scope of presidential authority over trade policy and reshape the balance of power between the executive and legislative branches. Markets will need to closely monitor the trajectory of US trade policy and its broader implications for global supply chains.

Post-Xi-Trump Summit Developments and Impact: Trade Truce and Future Outlook

After the Xi-Trump meeting held in Busan, South Korea, at the end of October 2025, China and the United States announced a one-year truce in economic and trade relations. The U.S. reduced the additional tariffs on Chinese goods from 57% to 47%, and cut the 10% fentanyl tariff imposed on China, Hong Kong, and Macau down to 10%. The U.S. also extended certain Section 301 tariff exclusions and suspended high-tech export controls for one year. In return, China suspended its planned new export restrictions on rare earths for one year and resumed the purchase of U.S. soybeans, revitalizing bilateral trade. These measures indicate a partial easing of U.S.-China trade tensions, though tariffs remain at elevated levels and have not returned to pre-dispute rates. This reflects both sides’ intention to avoid a full-scale confrontation while adjusting strategies through the fourth quarter of 2025. The outcomes of the Xi-Trump meeting were largely driven by both countries' need to stabilize relations amid economic and geopolitical pressures. The U.S., aiming to reduce domestic economic uncertainty and supply chain disruptions, made limited concessions on tariffs and export controls. China, on the other hand, sought to strengthen export competitiveness and stabilize its domestic supply chains by resuming agricultural imports and extending the rare earth export suspension. The Taiwan issue was notably left untouched, indicating a temporary focus on economic cooperation and de-escalation. However, the underlying structural tensions between the two countries remain unresolved. In the short term, the trade truce signaled by the Xi-Trump summit is expected to ease market concerns and slow tariff escalation, creating room for gradual recovery in bilateral trade. Yet, the long-term outlook for U.S.-China economic relations depends on the implementation of subsequent agreements and further strategic adjustments. Looking ahead to 2026, any escalation in Beijing’s stance toward Taiwan could renew bilateral tensions. Over the medium to long term, markets will need to monitor competition in technology and resource controls, as well as the potential for renewed trade frictions under shifting global economic conditions.

U.S. Government Shutdown Could Cost Economy Up to $14 Billion

According to the latest quantitative analysis by the U.S. Congressional Budget Office (CBO), since the U.S. government shutdown on October 1, if the shutdown lasts four to eight weeks, the annualized growth rate of real GDP in the fourth quarter of 2025 is projected to decline by 1.0 to 2.0 percentage points, corresponding to an economic loss of roughly $18 billion. The CBO also noted that by the end of 2026, irreversible economic losses of about $7 billion to $14 billion are expected, mainly due to permanent labor output losses caused by federal employees being furloughed or experiencing delayed pay. During the shutdown, approximately 650,000 federal employees are on unpaid leave, while another 600,000 continue working but with delayed pay; government procurement spending and food assistance programs (such as SNAP) are also temporarily reduced, further suppressing economic activity. The main factors driving these losses include: federal employees halting work and receiving delayed pay due to funding interruptions, directly reducing output; delays in government spending, especially for goods and services procurement, which—though expected to be compensated over two subsequent quarters after the shutdown—cause a short-term drop in private-sector output; interruptions in food assistance payments, increasing household consumption pressure; and contractors’ lost wages and contract payments, which further exacerbate negative economic effects. The CBO analysis points out that after the shutdown ends, government spending and employee salaries will partly offset the temporary slowdown in economic growth, with real GDP growth in Q1 2026 potentially rebounding by 1.4 to 3.1 percentage points. However, labor output lost due to forced furloughs represents a permanent loss, leaving cumulative GDP losses by the end of 2026 at roughly $7 billion to $14 billion that are unlikely to be recovered. In the short term, if the shutdown persists, economic performance and market confidence will be dragged down; in the medium term, uncertainty in government spending is expected to suppress investment and consumer spending, potentially slowing the overall pace of economic recovery, highlighting the need to closely monitor negotiation progress and policy adjustments.