“At a time when costs are rising and tariffs are wreaking havoc on people’s pocketbooks, Republicans are doubling down on their agenda of raising healthcare costs on millions of Americans.”

US states accounting for roughly a third of the nation’s gross domestic product are currently in recession or on the verge of one as the federal government shutdown enters its fourth week, with congressional Republicans and President  Donald Trump refusing to support an extension of key  healthcare subsidies that are  set to lapse at the end of the year.

A  recent analysis by Moody’s Analytics chief economist Mark Zandi estimates that 22 states are experiencing an economic downturn or are at serious risk of recession, a nascent crisis fuelled by Trump’s  tariffs,  mass deportations and sweeping attack on the federal workforce – an assault that has intensified since the federal government shut down at the beginning of October.

States currently in or on the brink of recession include  Maine,  Oregon, Washington,  Illinois and  Georgia. Among the states “treading water” are  California and  New York, according to Zandi, whose analysis was based on figures that predated the government shutdown.

Leor Tal, campaign director at the progressive advocacy coalition Unrig Our Economy, said on Monday in response to the analysis that “Republicans in Congress are holding the US economy hostage, and working families are paying the price".

“At a time when costs are rising and tariffs are wreaking havoc on people’s pocketbooks, Republicans are doubling down on their agenda of raising healthcare costs on millions of Americans,” said Tal. “It’s time for congressional Republicans to reopen the government, extend the healthcare tax credits, and start lowering costs for working families.”

The shutdown, which Trump has  embraced and exploited to advance his far-right agenda, began at a time when the country’s economy was already on an uneasy footing, with food prices  continuing to rise despite the president’s campaign promises,  GOP  Medicaid cuts  causing chaos across the nation and the labour market  flashing signs of distress.

With no end to the shutdown in sight, The Associated Press  noted on Sunday that the “the US Travel Association said the travel economy is expected to lose US$1 billion a week as travellers change plans to visit national parks, historic sites, and the nation’s capital, where many facilities such as Smithsonian Institution museums and the National Zoo are now closed to visitors".

If the government remains shut down in November, tens of millions of Americans  could see cuts to  Supplemental Nutrition Assistance Program benefits — which boost the economy while reducing hunger — and other aid.

Meanwhile, even as the  Trump administration  withholds federal labour market data amid the shutdown, economists say private and state-level figures signal escalating pain for  workers that is sure to intensify the longer the closure persists.

“The fingerprints of Trump policy decisions are most clearly found in the distinct rise in federal [ unemployment insurance] claims — claims filed specifically by workers laid off from federal agencies,” Elise Gould and Joe Fast of the Economic Policy Institute  wrote last week. “However, we are also seeing troubling trends in UI claims in regular state programs, particularly in the Washington, DC metropolitan area.

“The shutdown (and potentially the attempted politicisation of key government data-collection agencies) could leave policymakers flying blind just as the economy encounters real turbulence,” they cautioned.

John Diamond, director of the Centre for Public Finance at Rice University’s Baker Institute, warned earlier this month that the shutdown “could be a tipping point to recession".

“If it is resolved quickly, the costs will be small,” Diamond argued, “but if it drags on, it could send the US economy into a tailspin.”

Republished from Common Dreams, 20 October 2025

The views expressed in this article may or may not reflect those of Pearls and Irritations.