Finally, the historic US government shutdown wrapped up after an unprecedented 43 days. President Trump signed off on the funding measure that cleared the House in a 222-209 vote on Wednesday evening. The legislation delivers full-year funding for three departments, including agriculture and veterans’ affairs, while most other agencies are only covered until 30 January. That leaves the door open for another shutdown in just over 10 weeks if clashes over healthcare subsidies, pushed by Democrats, intensify.

Tough politics and fewer subsidies for US households

Republicans scored a win by blocking Democrats’ plan to extend Obamacare subsidies, leaving 22 million people, more than 6% of Americans, without extra support. For many, premiums could more than double, piling more pressure on households already feeling the pressure by rising costs and slow wage growth. But the shutdown ending does bring some relief in other areas: air travel should slowly get back on track after staffing chaos, and more than 40 million people will start receiving SNAP benefits again. SNAP covers 12% of households and makes up roughly 10% of grocery (nutrition) spending, with most recipients living below the poverty line. The lapse in benefits and higher health costs could spell trouble for President Trump and Republicans heading into the 2026 midterms, especially in counties where SNAP is a big part of household income. Here, the idea of supporting lower-income households ahead of the midterms makes political sense. Below, we share our take on President Trump’s recent proposal for “tariff rebate checks.”

Markets eagerly await the end of the data blackout

The shutdown froze the publication of key data and reports, including job numbers, inflation, and GDP figures. With federal workers returning, September payrolls typically would have been expected to be released next week, followed by retail sales and Q3 GDP (Atlanta Fed sees growth close to 4%). November data will likely be delayed but the Bureau of Labor Statistics (BLS) should be ready with the figures before the Fed’s 18 December meeting. However, reports suggest the White House may consider leaving out the October CPI and jobs reports altogether. That could become a major issue for markets as US CPI data have been published every month since the 1920s and employment reports since the end of World War II.

To what extent did the shutdown likely hamper growth, and will the rebound arrive?

Uncertainty, delayed SNAP benefits, and unpaid federal workers hurt confidence and spending. Backpay and catch-up spending will help, but Q4 GDP will probably look weak compared to the above 3% expected in Q3. The CBO estimates the shutdown shaved roughly 1.5 percentage points off growth. Still, we anticipate a rebound in consumer spending after the shutdown and into the Christmas season which will support growth in the last months of the year and into Q1 of 2026.

Money market stress looks set to ease

The government spending freeze ballooned the Treasury’s Fed account, draining reserves and spiking the overnight lending rate (SOFR) by 20bp on 31 October. The Fed’s liquidity backstops calmed things and the announced end of the quantitative tightening of the Fed’s balance sheet by the 1 December, together with the end of the shutdown should keep funding rates stable. As the Treasury General Account (TGA) is used as the frozen funds will be released, liquidity will flow back into the system, easing the pressure seen during the shutdown.

What about the government’s debt situation?

Despite the short-term relief in liquidity, the long-term debt problem and the elevated fiscal spending projections will likely put upward pressures on US yields. President Trump has again floated the idea of a “tariff rebate check” of around $2,000 per person for the “non-rich” part of the US households financed by tariff revenues. This could potentially add another fiscal spending boost of more than USD 400 billion — arguably far exceeding the annual tariff revenue, even under a favorable scenario for the administration without Supreme Court intervention. That would increase the US government deficit and likely add to upward pressures on inflation, particularly due to the usually high propensity to spend of lower income groups in the US. However, such a scenario would stimulate the US demand and economy again and support the growth outlook into 2026.

"After the shutdown” might be “before the shutdown”

Much of the current funding only lasts until January and the hottest political battle about parts of the US healthcare costs remains unresolved. We will monitor how the political dispute will continue and prepare for another rough political situation in the USA. For now, however, the end of the shutdown is good news and will likely lead to a positive economic environment at the year’s end and into 2026.