Kevin Hassett on Government Shutdown Economic Impact: Data Crisis and GDP Growth Concerns

This analysis is based on Kevin Hassett’s appearance on CNBC’s “Money Movers” on November 11, 2025 [1], where he discussed the severe economic implications of the ongoing 42-day government shutdown. The shutdown, which began on October 1, 2025, has created an unprecedented crisis in economic data collection and significant damage to economic growth prospects.

The most alarming revelation from Hassett’s interview is the permanent loss of crucial economic data. According to Hassett, “some of the surveys were never actually completed, so we’ll never, perhaps, even know what happened in that month” [2]. This represents a fundamental breakdown in the U.S. economic intelligence system, with the Bureau of Labor Statistics and Census Bureau operations paused during the shutdown period [2]. The missing data includes critical indicators such as the October employment report, September jobs report, third quarter GDP growth, and Personal Consumption Expenditures (PCE) index [5].

The shutdown has inflicted substantial damage on economic growth, knocking 1-1.5 percentage points off GDP growth rates that had reached nearly 4% in the past year [1]. Fourth quarter GDP growth could be cut in half to around 1.5% from the initial 3% estimate [3]. Hassett warned of potential “negative quarter” if the shutdown continues through Thanksgiving [4], highlighting the escalating economic costs as the impasse drags on.

The economic impact appears unevenly distributed, with manufacturing in a multi-year slump, housing remaining weak due to higher mortgage rates, and consumer spending slowing [1]. These structural weaknesses are being exacerbated by the government funding impasse, creating what Hassett described as “pockets of the economy that look like they’re in a recession” [3]. Despite the current challenges, Hassett expressed confidence in a swift recovery once federal operations resume, projecting a return to 3-4% growth by first quarter 2026, supported by AI-driven productivity boom and new tax policies [1].

The permanent loss of economic survey data creates unprecedented challenges for policymakers, investors, and businesses. Without reliable October 2025 economic data, the Federal Reserve and other policymakers will be making decisions with incomplete information, potentially leading to suboptimal policy choices. According to Goldman Sachs economists, “the shutdown of the federal government has delayed nearly all federal economic data releases for September and October” [5], and even after reopening, it will take time for statistical agencies to work through the backlog.

Hassett expressed disappointment with Federal Reserve Chairman Jerome Powell’s indication that the central bank might pause interest rate adjustments in December [3]. The shutdown should “make them more likely to move” toward rate cuts given the economic uncertainty, according to Hassett [3]. This creates potential tension between the White House and Federal Reserve over appropriate monetary policy response to the shutdown-induced economic weakness.

Beyond economic data, the shutdown is causing cascading failures in essential government functions. Air traffic controller shortages are causing major travel delays ahead of Thanksgiving [4], military paychecks could stop on November 15 [4], and SNAP benefits are being administered under legal strain [4]. These operational failures compound the economic damage and create additional uncertainty for businesses and consumers.

The analysis reveals several risk factors that warrant attention. The extended shutdown duration (42 days and counting) raises concerns about permanent economic damage, with Hassett warning that “some of the stuff is lost forever” [1]. The uncertainty created by missing economic data could lead to market volatility and mispricing of assets. Additionally, the potential for a “negative quarter” if the shutdown continues through Thanksgiving [4] represents a significant downside risk to economic growth.

Despite the current challenges, the projected recovery to 3-4% growth by Q1 2026 [1] presents an opportunity for investors and businesses positioned to benefit from the economic rebound. The AI-driven productivity boom and new tax policies mentioned by Hassett [1] could provide tailwinds for growth once the shutdown ends. However, the timing and magnitude of this recovery remain uncertain due to the data gaps.

Market participants will face significant challenges in analyzing economic conditions and making informed decisions without complete data sets. The October employment report may take several weeks to publish, if it’s released at all [5], creating a prolonged period of uncertainty that could affect investment strategies and business planning.

• Duration: 42 days as of November 11, 2025 (longest in U.S. history) [5]
• GDP Growth Impact: 1-1.5 percentage point reduction, Q4 growth potentially cut to 1.5% from 3% [1][3]
• Recovery Projection: Return to 3-4% growth by Q1 2026 [1]

• October employment report (normally released early November)
• September jobs report (delayed from early October)
• Third quarter GDP growth (scheduled for October 30)
• Personal Consumption Expenditures (PCE) index [5]

• Air traffic controller shortages causing Thanksgiving travel delays [4]
• Military paychecks potentially stopping November 15 [4]
• SNAP benefits under administrative strain [4]

Current market data shows mixed signals, with Chinese markets experiencing daily declines but showing some weekly resilience [0]. However, the lack of complete U.S. economic data makes comprehensive market analysis challenging during this period.