Treasury Secretary Warns Government Shutdown Threatens US GDP Growth

Treasury Secretary Scott Bessent said Thursday the US economy could feel the pain from the ongoing government shutdown.

“This isn’t the way to have a discussion, shutting down the government and lowering the GDP,” Bessent told CNBC’s “Squawk Box.”

“We could see a hit to the GDP, a hit to growth, and a hit to working America.”

Though past shutdowns have tended to leave only a small mark on the economy, Bessent cautioned that this shutdown, which began at midnight on Tuesday, could be different.

Economists have said that a prolonged stoppage could inflict more damage, especially if President Donald Trump were to follow through on threats to fire some of the 750,000 federal workers who are affected.

Asked whether Trump is actually considering that step, Bessent brushed it off as a “talking point.”

At the same time, he pinned the blame squarely on Democratic leadership in Congress, arguing that they have failed to present solutions.

“Senator [Chuck] Schumer, Representative [Hakeem] Jeffries, you know, they’re weak, they’re discombobulated,” Bessent said.

“They don’t represent the American people, and you know they’re making up excuses.”

Bessent’s warning comes as the shutdown drags on, with federal workers furloughed and key services frozen. Economists have long cautioned that extended shutdowns can ripple through the economy, curbing consumer confidence, slowing spending, and weighing on financial markets.

Bessent’s comments add to the pressure on lawmakers to resolve the standoff, which is already stoking uncertainty on Wall Street and among businesses reliant on government contracts.

Shutdown’s ramifications

The shutdown is hitting federal employees first.

Workers across agencies, including the CDC, Social Security Administration, and Department of the Interior, told Business Insider they’ve been getting blunt warning emails about possible furloughs, confusion over job security, and even politically charged language blaming Democrats for blocking funding.

The disruption also risks stalling crucial economic data.

The Bureau of Labor Statistics has already said it won’t release the September jobs report if the shutdown continues, and inflation figures scheduled for mid-October could be delayed.

Markets have reacted nervously: stocks dipped, bond yields edged lower, and gold surged to fresh highs as investors sought safe havens.

While history suggests shutdowns usually have a short-lived impact on markets, this one comes at a sensitive moment.

Economists warn that prolonged disruption could shave billions off quarterly GDP, derail the Federal Reserve’s decision-making, and deal a confidence blow that lasts long after the government reopens.