Goldman Sachs is warning that the month-long government shutdown could deal the biggest economic blow on record.
In a note to clients on Monday, the investment bank said the current shutdown is hitting more federal agencies than the 35-day closure in late 2018 and early 2019 — the previous longest shutdown — when several departments were temporarily funded to limit the fallout.
Goldman expects lawmakers will resolve the standoff in Congress by the second week of November. But if the shutdown drags on, the economic damage could deepen significantly.
“For a shorter shutdown of two to three weeks, the impact would mainly come from furloughed federal workers being off the job,” Goldman economist Alec Phillips wrote. “A longer shutdown, however, is likely to weigh more heavily on federal spending and investment and could spill into private-sector activity.”
Goldman projects that the shutdown will reduce economic growth in the fourth quarter of 2025 by about 1.15 percentage points, though it anticipates a rebound early next year. The pressure to reopen the government is mounting, especially as the first-ever missed SNAP (food stamp) payments occur and staffing shortages among air traffic controllers worsen.
Signs of strain are also emerging in consumer outlooks. Moody’s Analytics chief economist Mark Zandi recently estimated that the shutdown is costing the economy roughly $30 billion per week, trimming about 0.1% from quarterly annualized GDP growth every week the closure continues.
“The shutdown has now stretched nearly a month, and its broader economic implications are only beginning to come into focus,” Zandi wrote. “That is about to change.”
Amid a packed earnings calendar for restaurant companies, new data is signaling the possible onset of a restaurant recession—particularly hitting the fast-casual sector. This segment, which built its success on young, health-conscious diners drawn to fresh ingredients, counter service, and prices about 50% higher than traditional fast food, is now facing a sharp downturn in demand.
Chipotle’s stock dropped roughly 5% last week following its latest earnings report, which revealed shrinking margins and nearly flat comparable-store sales growth. Sweetgreen and Cava, both set to report earnings soon, have also seen their shares tumble as investors brace for weak traffic, squeezed profitability, and stagnant same-store sales.
Industry leaders are sounding the alarm. Chipotle CEO Scott Boatwright cited “persistent macroeconomic pressures,” telling *The Wall Street Journal* that younger customers are “just eating with us less frequently, and they’re eating at home more often.” Sweetgreen CEO Jonathan Neman was even more direct: “It’s pretty obvious that the consumer is not in a great place overall.”
The root cause? A softening job market and a surge in loan delinquencies that some experts warn could surpass previous debt crises in scale. For budget-conscious younger consumers, fast-casual meals no longer feel like a worthwhile splurge—they’re neither fast enough nor cheap enough. As a result, brands once adored by Millennials and Gen Z are confronting a stark new reality: loyalty doesn’t pay the bills when wallets are tight.
For two decades, fast-casual chains thrived as “affordable luxuries”—what writer Venkatesh Rao once called “premium mediocre”—catering to young professionals, office workers, and fitness enthusiasts seeking high-protein, clean-label meals. But now, many of those customers are cooking at home. A recent PwC survey found that more than half of Gen Z respondents plan to reduce restaurant spending over the next six months.
“It isn’t that difficult to replicate what you get there,” a UCLA law student told *The Journal*, noting he’s cut his Chipotle visits from several times a week to just twice a month.
This pullback isn’t limited to burritos and grain bowls. Lower-income diners are also shifting away from restaurant meals. McDonald’s recently reported double-digit declines in visits from its lowest-income customers—a reflection of the “bifurcated” U.S. economy that Federal Reserve Chair Jerome Powell highlighted last week. While the wealthiest Americans continue to spend freely on luxury travel and upscale dining, middle- and lower-income households are tightening their belts.
The stock market has taken note. McDonald’s shares have underperformed this year, gaining just 2% compared to the S&P 500’s nearly 17% rise. But the pain has been far worse for fast-casual names: Chipotle is down about 50% year-to-date, and Sweetgreen has plunged a staggering 80%.