Washington — The U.S. government has shut down for the first time in four years after Congress failed to reach a budget deal, forcing hundreds of thousands of federal workers off the job and sending fresh tremors through global markets.

The standoff threatens to weigh on U.S. growth, disrupt federal contracts, and delay economic data releases just as the Federal Reserve navigates inflation risks. Economists warn the fallout could ripple into global supply chains, trade flows and capital markets if the shutdown stretches beyond days.

Treasuries and the dollar came under pressure in early trading, while Asian equities slipped and European futures wavered. “Every week of shutdown shaves around 0.1 percentage point from annualized GDP,” said one analyst. “That’s not just a U.S. story — it drags on global demand.”

Market Reaction

Investors are bracing for volatility in equities, bonds and currencies. With U.S. debt issuance already under scrutiny after ratings downgrades earlier this year, the fiscal paralysis adds a new layer of risk. Safe-haven flows lifted gold, while emerging-market currencies weakened on capital flight concerns.

Trade and Aid Risks

Export licensing, customs clearance and federal procurement are expected to slow, adding stress to global supply chains in aerospace, agriculture and defense. Aid-dependent economies could also face delays in U.S. funding, deepening vulnerabilities in health, food and infrastructure programs.

What’s Next

The scale of global disruption hinges on the duration of the impasse. A short closure may be absorbed by markets, but a protracted one could raise borrowing costs worldwide and reinforce the IMF’s warnings of a global slowdown.

For now, investors are watching Washington’s political standoff as closely as any Fed signal — with the world economy caught in the crossfire.