Agencies could still be digging out from shutdown when funding deal ends, association says

While the longest government shutdown in history is over, it may take months for agency operations and the U.S. economy to rebound. And there could be another funding lapse before that happens. 

The Professional Services Council, a trade association for federal contractors, projects that each calendar day of the shutdown equates to three to five days for agency functions to return to normal. Under this timeline, the government won’t return to pre-shutdown operational capacity until March 2026. 

“We know from history that departments and agencies — and their contracting partners — will continue to feel the impact of this shutdown for months to come,” PSC CEO James W. Carroll said in a statement. “For example, there are challenges in digging out from back-logged invoices, rescinding stop work orders and flowing payments throughout the supply chain.”

The trade association urged agencies to prioritize restarting invoice processing, as many federal contracting officials had been furloughed, and reversing contractor stop work orders that were prompted by the shutdown. 

While federal employees who were ordered not to work during the shutdown are set to receive backpay, despite the Trump administration threatening to withhold retroactive compensation in apparent contravention of a 2019 law, government contract employees are not required to receive backpay. 

Likewise, the Congressional Budget Office predicted in an Oct. 29 report that agencies would make up for lost spending during the funding lapse in the quarter after the shutdown ends (i.e. January-March 2026). 

Under the bipartisan agreement to end the 43-day shutdown, funding for most agencies expires at the end of January, though the Agriculture and Veterans Affairs departments, as well as legislative branch operations, will be funded through Sept. 30. If Congress does not reach a deal to avert another appropriations lapse before then, government workers could find themselves in another shutdown before they’ve resolved backlogs caused by the previous one. 

CBO also estimated that the annualized quarterly real gross domestic product growth rate for the fourth quarter of 2025 would be 1.5% lower after a six-week shutdown; although, the nonpartisan legislative accounting agency reported that the U.S. economy would more than recover in the following quarter. Still, CBO expected an unrecoverable loss of $11 billion due to work that furloughed feds could not perform during the shutdown. 

Kevin Hassett, the director of the White House National Economic Council, told reporters on Thursday that the shutdown is estimated to have cost the economy about $15 billion per week, leading to a 1-1.5% dip in GDP. He also projected that 60,000 non-federal workers lost their jobs due to decreased spending.