U.S. Government Shutdown Averted as Bipartisan Bill Passes, Economic Outlook Remains Uncertain

The U.S. government avoided a prolonged shutdown as a bipartisan funding bill cleared the Senate on November 10 with a 60-40 vote, sending it to the House for final approval. The legislation, which funds federal operations through 2026, restores critical services like food assistance and veteran programs while addressing back pay for federal employees furloughed during the 35-day shutdown. However, the agreement excludes extensions for Affordable Care Act (ACA) subsidies, a move that has drawn criticism from Democratic lawmakers who warn the lapse could leave millions without health coverage within months.

The House, led by Speaker Mike Johnson, faces a pivotal test of its ability to unify a fractured Republican base. While some conservatives oppose the compromise as capitulation to Democratic priorities, others see it as necessary to avoid further economic damage. Trump’s endorsement of the Senate deal—calling it a win for Republicans and a step toward “reopening the country”—has bolstered Johnson’s position, though internal dissent over cuts to social programs persists. If passed by the House, the bill would end the longest government shutdown in U.S. history and prevent disruptions to key economic indicators ahead of the Federal Reserve’s December rate decision.

White House economic adviser Kevin Hassett has projected a return to 3%-4% annual growth by early 2026, but the shutdown’s drag on consumption and global trade could erase 1-1.5 percentage points from this trajectory. Economists highlight structural challenges, including sticky inflation, tepid job growth, and Trump’s tariffs, which a recent survey suggests could reduce GDP by up to 0.5 percentage points. Despite these headwinds, Hassett emphasized progress in restoring household purchasing power, citing a $1,200 increase since Trump’s inauguration compared to a $3,400 decline under Biden.

The resolution of the shutdown has also spurred market optimism, particularly in Asia. Indian markets opened higher on hopes of a U.S.-India trade deal, with Trump hinting at reduced tariffs on Indian goods. Meanwhile, U.S. stocks rallied after the Senate vote, though gold prices rose to a three-week high as investors priced in a December Federal Reserve rate cut. Fed Governor Stephen Miran has advocated continued easing, citing weak labor markets and inflation data that, while volatile, show an “overall trajectory” of improvement.

Internationally, the outcome underscores the interconnectedness of U.S. fiscal policy and global markets. The resumption of federal data releases—such as nonfarm payrolls and inflation reports—will provide clearer signals for central banks and investors navigating a fragile recovery. Yet, the exclusion of ACA subsidies in the funding bill highlights persistent partisan divides that could reignite in 2026 when the current agreement expires.

The path forward remains uncertain. While the immediate crisis has been averted, unresolved tensions over healthcare, tariffs, and fiscal priorities suggest Congress could face renewed gridlock. For now, the focus shifts to how quickly the House can finalize the bill and whether Trump’s influence can hold the GOP together long enough to avoid another shutdown.