U.S. Airlines slash schedules nationwide amid the longest government shutdown in history. Image credit: The Guardian
(The Post News) – The United States isn’t just facing empty skies; it is facing an economic storm. As the Federal Aviation Administration slashes flight schedules to cope with severe staffing shortages, economists warn the ripple effects are spreading through nearly every corner of the economy.
The shutdown entered its 40th day Wednesday and has already cost airlines billions, stranded millions of passengers, and triggered supply chain disruptions that could push up consumer prices just before the holiday shopping season.
“Thanksgiving is one of the hottest times of the year for the economy,” White House economic adviser Kevin Hassett said. “If people aren’t travelling, we could be looking at a negative quarter for growth.”
Flights Grounded, Economy Dragged Down
The FAA ordered airlines to cut 4% of daily flights starting Friday at 40 of the country’s busiest airports. That number rises to 6% on Tuesday and 10% by November 14, and could reach 20% if the shutdown continues, according to Transportation Secretary Sean Duffy.
Those reductions hit more than 4 million passengers and are costing the U.S. economy between $285 million and $580 million every day, according to Airlines for America.
Airlines are bleeding revenue, but the losses don’t stop there. Fewer flights mean fewer hotel bookings, car rentals, restaurant meals, and tourism dollars in local economies.
“Every canceled flight represents a family trip, a business deal, a shipment of goods that never left the ground,” said Alicia Townsend, an aviation economist with the Brookings Institution. “The ripple effect is brutal.”
Nearly half of all U.S. air freight flies in the bellies of passenger jets, and with thousands of flights grounded, retailers are scrambling to restock stores ahead of the holiday shopping rush.
Shipping costs have already jumped, and analysts predict higher prices for goods ranging from electronics to apparel.
The manufacturers reliant on just-in-time air shipments now have to deal with delays and production slowdowns. “We’re looking at the start of a supply chain crunch,” Townsend said.
Airline stocks, despite the chaos, edged up Monday morning after the U.S. Senate advanced a bill to temporarily reopen the government.
United Airlines led, up 1.9% in premarket trading, followed by Delta and American Airlines, which each rose 1.4%. The optimism might fade, though, if lawmakers are unable to finalize an agreement within days.
As President Donald Trump said on Sunday, “It looks like we’re getting very close to the shutdown ending,” but even if the government reopens this week, analysts say the damage is already baked in.
“You can’t just flip the switch back on,” said Katherine Wu, senior analyst at Moody’s Analytics. “It takes weeks to rebuild schedules, rehire controllers, and get air traffic back to normal. The economic drag will last well beyond the shutdown.”
The Price of Grounded Skies
The FAA says 20% to 40% of the air traffic controllers have stopped coming to work. Many are putting in 10-hour days, six days a week, without pay. The burnout has forced the agency to take action, ordering airlines to scale back flights to maintain safety.
Transportation Secretary Duffy estimated the U.S. is 1,000 to 2,000 controllers short, and that retirements have tripled since the shutdown began. “Every day this continues, we lose experience we can’t replace,” he said.
The loss of air traffic capacity is already weighing on consumer spending, business travel, and freight movement, core components of U.S. GDP. Economists now estimate the shutdown could shave 0.4 to 0.6 percentage points off fourth-quarter growth if it continues into mid-November.
As Thanksgiving approaches, travellers are finding that the government shutdown has grounded not just planes, but parts of the U.S. economy itself. From factory floors to airport gates, the costs of political gridlock are piling up. “Every day the shutdown drags on, America’s economy loses altitude,” Townsend said.
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