US Government Shutdown Deepens, Threatening Air Safety, Trade

The US government shutdown, now the longest in its history with 38 days, is straining critical sectors of the economy, from aviation safety and supply chains to border trade and household consumption, as funding delays cascade through the federal system.

According to the Congressional Budget Office (CBO), the lapse in appropriations that began Oct. 1, after lawmakers failed to reach a last-minute agreement to fund operations for the new fiscal year, could reduce growth of the US GDP by up to 2% in the 4Q25 if it extends eight weeks, delaying as much as US$74 billion in federal spending. While most of that loss would be recouped once the government reopens, between US$7 billion and US$14 billion in real output will be permanently lost due to unworked hours and reduced private consumption.

Aviation Safety Under Strain

One of the shutdown’s most visible effects is unfolding in US airspace. With air traffic controllers working without pay, the Federal Aviation Administration (FAA) has ordered a temporary 10% reduction in flights at 40 major airports, including Atlanta (ATL), Los Angeles (LAX), Chicago O’Hare (ORD), and New York’s JFK, and LaGuardia (LGA), aiming to prevent system overload.

Transportation Secretary Sean Duffy says that the decision was based on “data-driven risk assessment, not politics,” as reports of fatigue and staffing stress multiply across control centers. The FAA’s phased order begins with a 4% reduction on Nov. 7, escalating to 10% by Nov. 14.

Additional measures include restrictions on visual flight rules (VFR) approaches and parachute operations at understaffed facilities, and time-limited commercial space launches. While safety is expected to remain unaffected, 2,740 flight delays were reported nationwide over the weekend, a sign of growing operational fragility.

“The FAA has ordered US airlines to cut flights in order to maintain the safety and reliability of the NAS. Safety is our shared top priority, and we will comply with the FAA’s order while working to mitigate disruption for travelers. We are now 38 days into this unprecedented shutdown, the longest in our country’s history. Air traffic controllers and TSA officers are receiving yet another empty paycheck. More than 3.5 million passengers have experienced delays or cancellations because of air traffic control staffing concerns since the shutdown began. This simply is not sustainable,” says Airlines for America (A4A), the trade association representing major US carriers.

With the Thanksgiving travel period approaching, A4A anticipates a record 31 million passengers between Nov. 21 and Dec. 1. “We implore Congress to act with extreme urgency to get the federal government reopened, get federal workers paid, and get our airspace back to normal operations. Time is of the essence,” says A4A.

In 2024, air freight remained a crucial yet lightweight component of US international trade. According to the US Bureau of Transportation Statistics, although it represented just 0.4% of total freight tonnage, air cargo carried a 30% of the total trade value, equivalent to US$1.5 trillion. This underscores its central role in transporting high-value, time-sensitive goods such as electronics, pharmaceuticals, and precision instruments. By contrast, maritime transport dominated in volume, moving 79.2% of total weight (1.7 billion tons) and 42.4% of trade value (US$2.2 trillion). Trucks followed, handling 6% of total tonnage and 20.2% of total value, while rail and pipelines collectively contributed 6.1% of value and 14.4% of weight. Overall, air cargo’s small physical footprint contrasts sharply with its outsized economic significance in the US trade system

Border Trade Disruptions Worsen

Reports at the beginning of the shutdown stated that In the US-Mexico border, reductions in Customs and Border Protection (CBP) staffing have resulted in hours-long waits at crossings such as Ciudad Juarez-El Paso, among the busiest trade corridors in North America.

Residents and freight operators have reported delays of up to six hours, disrupting worker mobility and the delivery of export goods. Local businesses warn that prolonged inefficiencies could erode competitiveness in one of the hemisphere’s most integrated binational economies.

“People are wasting half their day in line. This is directly impacting tourism, manufacturing, and trade,” said one Juarez commuter to EFE.

Supply Chains and Industry Outlook

Early signs of supply chain deceleration are emerging as federal inspection agencies reduce hours or rely on unpaid staff. Analysts note that cargo inspection delays at ports and border facilities could produce backlogs if absenteeism rises.

However, the overall freight market remains buffered by a soft second-half demand cycle and excess carrier capacity, which are keeping rates low. According to the Institute for Supply Management, in its ISM Services PMI Report, these conditions reduce the risk of inflationary supply shocks but expose operators to liquidity risks if the shutdown persists.

Private sector executives warn of looming consequences if appropriations are not restored soon. “Our sites are funded through the next couple of months, but if the shutdown continues beyond that, we expect mass furloughs,” says a management firm representative.

Consumer Spending Faces a Shock

The shutdown has also triggered a temporary suspension of Supplemental Nutrition Assistance Program (SNAP) benefits as of Nov. 1, a critical income stream for 42 million US citizens. The White House announced it would follow through on plans to partially fund critical food aid during the government shutdown, despite President Donald Trump’s threat just hours earlier that he would withhold the federal assistance, reports CNN.

The interruption threatens to reduce retail activity and freight demand nationwide. Jason Miller, Eli Broad Endowed Professor of Supply Chain Management, Michigan State University, says that when expanded SNAP benefits ended in March 2023, inflation-adjusted merchandise sales fell nearly 3% month over month, while food manufacturing output declined sharply. Retailers such as Walmart, Kroger, and Costco, which capture over 35% of SNAP-linked spending, face significant exposure.

A prolonged benefits gap could cut into grocery volumes, limit trucking activity tied to perishable goods, and suppress short-term inflationary pressures by weakening demand.

Macroeconomic and Labor Implications

The CBO report projects a temporary rise of 0.4% in the unemployment rate as 650,000 federal workers are furloughed and 600,000 continue working without pay. The agency’s models show that real GDP will drop by between US$18 billion and US$39 billion in 4Q25 depending on shutdown length, before rebounding in early 2026 as spending resumes.

Still, delayed payments and curtailed consumption will weigh on private investment and confidence. “The longer the shutdown persists, the greater the compounding effect on household behavior and aggregate demand,” the CBO warns.
According to CBS, the Senate is set to vote today on advancing the House-passed continuing resolution for a 15th time, but with a new proposal from the Republicans that aims to attract Democrats' support to end the government shutdown.