U.S. Shutdown Drags Economy to 3½-Year Sentiment Low as Flight Cuts Loom Now in its sixth week, the shutdown — the longest in U.S. history — has furloughed hundreds of thousands of federal workers, halted publication of most official data, and delayed food benefit payments for millions of low-income Americans.

The record-breaking U.S. government shutdown is rippling through the economy, driving consumer confidence to its lowest level in three and a half years and threatening to ground a fifth of domestic air travel as federal agencies struggle to stay operational.

The University of Michigan's Consumer Sentiment Index dropped to 50.3 in early November from 53.6 in October, the weakest reading since mid-2022. The fall reflects deepening anxiety across income groups as the shutdown disrupts federal payments, slows services, and erodes confidence in Washington's ability to govern.

Economic Fallout Mounts as Shutdown Persists

Now in its sixth week, the shutdown — the longest in U.S. history — has furloughed hundreds of thousands of federal workers, halted publication of most official data, and delayed food benefit payments for millions of low-income Americans.

The Congressional Budget Office (CBO) estimates that fourth-quarter U.S. economic growth could shrink by 1 to 2 percentage points due to lost output, with between $7 billion and $14 billion unlikely to be recovered.

White House economic adviser Kevin Hassett acknowledged the damage on Friday, saying the shutdown's impact was "far worse than expected," though he predicted a rebound once the government reopens.

Economists warned, however, that the length of the current standoff could leave lasting scars. "This kind of prolonged shutdown could lead to more meaningful economic weakness," said Daniel Hornung of the Stanford Institute for Economic Policy Research.

Amid 'K-Shaped' Recovery

The University of Michigan survey underscored what analysts call a K-shaped economy, in which wealthier Americans benefit from strong stock markets while lower-income households face mounting hardship.

Sentiment improved among consumers with large stock holdings but deteriorated across all other income levels. "The top 20% of households by income drive 40% of consumer spending," said Michael Pearce, deputy U.S. economist at Oxford Economics. "The buoyant stock market has strengthened this year, widening the divide."

Inflation expectations remain elevated, with consumers anticipating 4.7% price growth over the next year. Meanwhile, 62% of households expect the unemployment rate to rise in 2026 — the highest level of pessimism since 1980.

FAA Orders Flight Cuts as Air Traffic Crisis Grows

The shutdown's effects are particularly visible in aviation, where staffing shortages have forced the Federal Aviation Administration (FAA) to impose flight reductions at 40 major airports for safety reasons.

U.S. Transportation Secretary Sean Duffy warned Friday that airlines could be ordered to cut up to 20% of flights if the shutdown continues and more air traffic controllers fail to report for work.

The FAA began with a 4% reduction on Friday, affecting about 700 flights from major carriers American, Delta, Southwest, and United, and plans to raise cuts to 10% by November 14 if conditions worsen.

At Reagan Washington National Airport, delays averaged four hours Friday evening, with 17% of flights canceled and nearly 40% delayed, according to FlightAware.

Airlines Brace for Worsening Disruptions

Airline executives warned that the impact could quickly escalate. "This level of cancellation is going to grow over time, and that's going to be problematic," said American Airlines CEO Robert Isom, whose carrier canceled 220 flights on Friday, affecting 12,000 passengers.

United Airlines said it canceled 184 flights Friday and expected to cut a similar number over the weekend, though most passengers were rebooked within hours.

Duffy said the decision was based on safety data, including reports of planes failing to maintain separation and ground incursions, as exhausted controllers work unpaid for a second consecutive pay period.

The FAA has also restricted private flights and space launches to preserve safety margins, while international flights remain unaffected.