US government shutdown: What happens and who is affected?


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The US government remains shut down as deep partisan divisions prevent Congress and the White House from reaching a funding deal.

If it continues past November 4, its 35th day, it will become the longest shutdown in US history. The stand-off has seen hundreds of thousands of federal workers sent on furlough with their pay on indefinite hold, brought major disruption to airports and put food benefits that are vital to millions of Americans at risk.

US government shutdowns are not uncommon but this one seems set to drag on as neither party is willing to compromise.

The Republican-led House of Representatives passed a massive spending bill at the end of September and then adjourned, leaving the Senate with the decision to take it or leave it. The bill does not have enough backing from Democrats to pass in its current form. They say it will force up health insurance costs for millions.

President Donald Trump continues to advocate major cuts to government agencies and he has already laid off thousands of federal employees in an attempt to battle waste. He has used the threat of more cuts to try to push Congress into passing the budget.

What does a US government shutdown mean?

With the shutdown in place, federal agencies have been required to halt all non-essential operations. This is affecting a range of activities, from national parks to passport applications.

According to the Congressional Budget Office, the shutdown has already cost the economy more than $7 billion.

Some federal employees have been told not to report to work. More than 800,000 federal employees were sent on furlough during the 2013 shutdown, according to the Office of Management and Budget. The furloughs would lead to long waiting times on passport applications and small business loans.

Most federal buildings and attractions, such as the Smithsonian museums in Washington, have been closed for weeks. National parks remain open, but the National Park Service is not on patrol and visitor centres are closed.

How will the shutdown affect the economy?

The shutdown could also affect the US economy and the nation's credit rating, according to Moody's review of past similar situations.

“A shutdown would be credit-negative for the US sovereign,” the credit ratings agency said to clients.

A government-wide shutdown would reduce economic growth by about 0.15 percentage points for each week it lasts, Goldman Sachs says.

How many times has the government shut down?

The federal government has shut down 21 times over the past five decades. The most recent shutdown was also the longest.

From December 2018 to January 2019, during his first term in office, Mr Trump forced a government shutdown to receive funding for the US-Mexico border wall. That ended after 35 days without any funding.

It was one of three shutdowns to have happened during Mr Trump's term. The first lasted three days, and the second only for a few hours.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: November 04, 2025, 2:00 AM