New York,USA 30,September.2025
The US financial markets are bracing for a period of intensified volatility as two significant, interconnected economic events approach: the looming threat of a US government shutdown and the highly anticipated release of the Fourth Quarter (Q4) Advance Estimate for Gross Domestic Product (GDP).
The US Bureau of Economic Analysis (BEA) is scheduled to release its initial reading of the Q4 2025 GDP growth on January 29, 2026. However, with political gridlock raising the odds of a government shutdown by the end of this week, market participants are facing both a data visibility problem and the real prospect of a direct economic hit. The convergence of fiscal uncertainty and crucial economic data has put global investors on edge.
Headline Points
* Data and Gridlock: Financial markets are anxious about the US GDP Q4 Advance Estimate release (scheduled for January 29, 2026) due to the concurrent risk of a US government shutdown.
* Economic Cost: Economists estimate that each week of a government shutdown could reduce Q4 GDP growth by approximately 0.1 to 0.2 percentage points on an annualised basis, primarily due to furloughs and delayed government procurement.
* The Data Drought: A shutdown would delay the release of key economic indicators—including the GDP report itself—leaving the Federal Reserve and investors operating in the dark at a pivotal moment.
* Forecast Outlook: Prior to the shutdown risk, private forecasters were generally anticipating a continued slowdown in US economic growth, with the Q4 real GDP growth forecast around 1.5% to 2.5%.
The Double Whammy: Shutdown and GDP
The core concern for global finance is the potential for a “data drought” that an extended government shutdown would trigger. Federal agencies responsible for collecting and disseminating critical economic statistics—including the BEA, which produces the GDP report—would halt non-essential operations. This means the highly-anticipated GDP figure, along with other vital reports on inflation, trade, and consumer spending, could be delayed indefinitely.
This lack of visibility comes at a sensitive time for policymakers. Without accurate, up-to-date data, the Federal Reserve (Fed) would face increased difficulty in setting monetary policy, raising the risk of missteps in a climate already dominated by high inflation concerns and a desire to avoid a recession.
Direct Impact on Economic Growth
Beyond the data visibility issue, a shutdown carries a quantifiable negative impact on the real economy. Analysts at major firms estimate that a shutdown would subtract between $7 billion and $10 billion from the US economy each week. This loss of activity, driven by the temporary furlough of hundreds of thousands of federal employees and the freezing of non-essential government contracts, translates to a direct hit on the Q4 GDP reading.
While historically, the impact of brief shutdowns has been reversed by retroactive pay once the government reopens, the drag on private-sector confidence and the temporary cessation of services represent an unwelcome headwind for an economy already grappling with a slowdown.
The Forecast: A Slowing Expansion
Before the political crisis intensified, private-sector economists were already predicting a moderate slowdown in US economic expansion for the fourth quarter. Following a stronger-than-expected showing in Q3, many forecasts had pegged the Q4 annualised real GDP growth rate between 1.5% and 2.5%. This projected deceleration reflects the cumulative impact of aggressive interest rate hikes and tightening financial conditions.
The potential for a shutdown now puts a floor under this estimate, with any duration of the funding lapse likely to push the final Q4 figure lower and raise the risk of a technical contraction in the new year.
As the deadline for a funding deal approaches, markets are expected to see a sharp rise in volatility, with investors moving toward safer assets until the political uncertainty is resolved.
