Federal shutdowns usually don't do much economic damage. There are reasons to worry about this one

WASHINGTON (AP) — Shutdowns of the federal government usually don't leave much economic damage. But the one that started Wednesday looks riskier, not least because President Donald Trump is threatening to use the standoff to permanently eliminate thousands of government jobs and the state of the economy is already precarious.

For now, financial markets are shrugging off the impasse as just the latest failure of Republicans and Democrats to agree on a budget and keep the government running.

“Everyone seems quite complacent about the shutdown, assuming the Democrats and Republicans will come to terms and life will go on, as has been the case in past shutdowns,” the independent economist Ed Yardeni wrote in a commentary Thursday. "History could certainly repeat, especially with a man known for dealmaking sitting in the Oval Office.''

But given the chasm separating the two political parties, Yardeni added, "the lack of caution is somewhat surprising.''

The U.S. government has now shut down 21 times in the past half century. The last of those shutdowns was the longest — stretching five weeks in December 2018 into January 2019 during Trump's first term.

Even that one barely left a mark on the world's biggest economy: The Congressional Budget Office estimates that it shaved just 0.02% off 2019 U.S. gross domestic product — the nation's output of goods and services.

The economic impact of shutdowns is usually fleeting. Federal workers get furloughed and the federal government delays some spending while they last. When they’re over, federal workers go back to their jobs and collect back pay, and the government belatedly spends the money it had withheld. It’s pretty much a wash.

“Government shutdowns are inconvenient and messy,″ said Scott Helfstein, head of investment strategy at the investment firm Global X. ”But there is little evidence that they have a significant impact on the economy. Typically, the lost economic activity, if meaningful in the first place, is recovered in the following quarter.″

Government benefit payments that provide crucial income support for millions of Americans, such as Social Security, and health care programs such as Medicare, won’t be disrupted by the shutdown.

Data from previous shutdowns have shown little impact on U.S. GDP unless they are extended, according to CBO Director Phillip Swagel. “The impact is not immediate, but over time, there is a negative impact of a shutdown on the economy,” he recently told The Associated Press.

The damage could be worse this go-around.

First, some government agencies dodged the 2018-2019 shutdown because they'd received funding in advance and could just continue operating. That hasn't happened this time: The CBO estimates that about 750,000 federal employees could be temporarily laid off.

Trump is also considering something more destructive: His budget office has threatened the mass firing of federal workers this time, not just putting them on temporary furlough.

A “reduction in force'' would not only lay off employees but eliminate their positions, threatening more upheaval for a workforce that’s already been purged by Trump. “We’d be laying off a lot of people that are going to be very affected, and they’re Democrats. They’re going to be Democrats," the president said Tuesday.

Thomas Ryan of Capital Economics wrote in a commentary that “it is reasonable to assume that (Trump’s mass layoff threat) is political bluster, aimed at pressuring Democrats to approve a funding extension without concessions.” But, he added, “if followed through, it could have longer-term consequences, prolonging government downsizing and keeping the sector as a drag on payrolls into next year."

Ryan Sweet, chief U.S. economist at Oxford Economics, estimates that the shutdown and temporary loss of income for federal workers could shave 0.1 to 0.2 percentage points from the nation's annual growth rate in the fourth quarter for each week the government is closed. Some of that will be recovered once it reopens.

“The economic costs of government shutdowns are normally minimal unless they last for several weeks,” Sweet wrote.

The showdown also comes at a time when the job market is already under strain, damaged by the lingering effects of high interest rates and uncertainty around Trump's erratic campaign to slap taxes on imports from almost every country on earth and on specific products — from copper to foreign films.

Labor Department revisions earlier this month showed that the economy created 911,000 fewer jobs than originally reported in the year that ended in March. That meant that employers added an average of fewer than 71,000 new jobs a month over that period, not the 147,000 first reported. Since March, job creation has slowed even more — to an average 53,000 a month. During the 2021-2023 hiring boom that followed COVID-19 lockdowns, by contrast, the economy was creating 400,000 jobs a month.

The September jobs report was supposed to come out Friday — forecasters had expected to see 50,000 new jobs last month — but has been delayed indefinitely by the shutdown.

The economy is sending mixed signals, however. GDP growth came in at a strong 3.8% annual pace from April through June, reversing a 0.6% drop in the first three months of the year. But it's not yet clear if that solid growth can continue, or if it will spur a rebound in hiring.

“The economy is very much on a ‘knife’s edge,’” said Michael Linden, senior policy fellow at the left-leaning Washington Center for Equitable Growth. “The economic data is pointing in different directions right now. Second-quarter GDP growth was strong, but how much of that was merely a bounce back from incredibly weak first quarter GDP is hard to know. What we know for sure is that the economy is creating fewer jobs, wage growth is slowing, and middle-class consumers are feeling pinched.”

Associated Press Writer Fatima Hussein in Washington contributed to this story.

Financial information is displayed as traders work on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)

John O'Hara works on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)

Speaker of the House Mike Johnson, R-La., and GOP leaders, from left, Rep. Lisa McClain, R-Mich., Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., blame the government shutdown on Democrats during a news conference at the Capitol in Washington, Thursday, Oct. 2, 2025. (AP Photo/J. Scott Applewhite)

The U.S. Capitol is seen, Thursday, Oct. 2, 2025, in Washington. (AP Photo/Mariam Zuhaib)

The US. Capitol is photographed, Wednesday, Oct. 1, 2025, on Capitol Hill in Washington. (AP Photo/Mariam Zuhaib)

HAVANA (AP) — Cuban soldiers wearing white gloves marched out of a plane on Thursday carrying urns with the remains of the 32 Cuban officers killed during a stunning U.S. attack on Venezuela as trumpets and drums played solemnly at Havana's airport.

Nearby, thousands of Cubans lined one of the Havana’s most iconic streets to await the bodies of colonels, lieutenants, majors and captains as the island remained under threat by the administration of U.S. President Donald Trump.

The shoes of Cuban soldiers clacked as they marched stiff-legged into the headquarters of the Ministry of the Armed Forces, next to Revolution Square, with the urns and placed them on a long table next to the pictures of those slain so people could pay their respects.

Thursday’s mass funeral was only one of a handful that the Cuban government has organized in almost half a century.

Hours earlier, state television showed images of more than a dozen wounded people accompanied by Cuban Foreign Minister Bruno Rodríguez arriving Wednesday night from Venezuela. Some were in wheelchairs.

The official announcer indicated that they were “combatants” who had been “wounded” in Venezuela. They were greeted by the Minister of the Interior, Lázaro Alberto Álvarez, and the Minister of the Revolutionary Armed Forces, Álvaro López Miera.

Those injured and the bodies of those killed arrived as tensions grow between Cuba and U.S., with President Donald Trump recently demanding that the Caribbean country make a deal with him before it is “too late.” He did not explain what kind of deal.

Trump also has said that Cuba will no longer live off Venezuela's money and oil. Experts warn that the abrupt end of oil shipments could be catastrophic for Cuba, which is already struggling with serious blackouts and a crumbling power grid.

Officials unfurled a massive flag at Havana's airport as President Miguel Díaz-Canel, clad in military garb as commander of Cuba's Armed Forces, stood silent next to former President Raúl Castro, with what appeared to be the relatives of those slain looking on nearby.

Cuban Interior Minister Lázaro Alberto Álvarez Casa said Venezuela was not a distant land for those killed, but a “natural extension of their homeland.”

“The enemy speaks to an audience of high-precision operations, of troops, of elites, of supremacy,” Álvarez said in apparent reference to the U.S. “We, on the other hand, speak of faces, of families who have lost a father, a son, a husband, a brother.”

Álvarez called those slain “heroes,” saying that they were example of honor and “a lesson for those who waver.”

“We reaffirm that if this painful chapter of history has demonstrated anything, it is that imperialism may possess more sophisticated weapons; it may have immense material wealth; it may buy the minds of the wavering; but there is one thing it will never be able to buy: the dignity of the Cuban people,” he said.

Thousands of Cubans lined a street where motorcycles and military vehicles thundered by with the remains of those killed.

“They are people willing to defend their principles and values, and we must pay tribute to them,” said Carmen Gómez, a 58-year-old industrial designer, adding that she hopes no one invades given the ongoing threats.

When asked why she showed up despite the difficulties Cubans face, Gómez replied, "It’s because of the sense of patriotism that Cubans have, and that will always unite us.”

Cuba recently released the names and ranks of 32 military personnel — ranging in age from 26 to 60 — who were part of the security detail of Venezuelan President Nicolás Maduro during the raid on his residence on January 3. They included members of the Revolutionary Armed Forces and the Ministry of the Interior, the island’s two security agencies.

Cuban and Venezuelan authorities have said that the uniformed personnel were part of protection agreements between the two countries.

Meanwhile, a demonstration was planned for Friday across from the U.S. Embassy in an open-air forum known as the Anti-Imperialist Tribune. Officials have said they expect the demonstration to be massive.

“People are upset and hurt. There’s a lot of talk on social media; but many do believe that the dead are martyrs” of a historic struggle against the United States, analyst and former diplomat Carlos Alzugaray told The Associated Press.

In October 1976, then-President Fidel Castro led a massive demonstration to bid farewell to the 73 people killed in the bombing of a Cubana de Aviación civilian flight financed by anti-revolutionary leaders living in the U.S. Most of the victims were Cuban athletes returning to their island.

In December 1989, officials organized “Operation Tribute” to honor the remains of more than 2,000 Cuban combatants who died in Angola during Cuba’s participation in the war that defeated the South African army and ended the apartheid system. In October 1997, memorial services were held following the arrival of the remains of guerrilla commander Ernesto “Che” Guevara and six of his comrades, who died in 1967.

A day before the remains of those slain arrived in Cuba, U.S. Secretary of State Marco Rubio announced $3 million in relief aid to help the island recover from the catastrophic Hurricane Melissa, which struck in late October.

The first flight took off from Florida on Wednesday, and a second flight was scheduled for Friday. A commercial vessel also will deliver food and other supplies.

“We have taken extraordinary measures to ensure that this assistance reaches the Cuban people directly, without interference or diversion by the illegitimate regime,” Rubio said, adding that the U.S. government was working with Cuba's Catholic Church.

The announcement riled Cuban Foreign Minister Bruno Rodríguez.

“The U.S. government is exploiting what appears to be a humanitarian gesture for opportunistic and politically manipulative purposes,” he said in a statement. “As a matter of principle, Cuba does not oppose assistance from governments or organizations, provided it benefits the people and the needs of those affected are not used for political gain under the guise of humanitarian aid.”

Coto contributed from San Juan, Puerto Rico.

Workers fly the Cuban flag at half-staff at the Anti-Imperialist Tribune near the U.S. Embassy in Havana, Cuba, Monday, Jan. 5, 2026, in memory of Cubans who died two days before in Caracas, Venezuela during the capture of Venezuelan President Nicolas Maduro by U.S. forces. (AP Photo/Ramon Espinosa)