Government shutdowns aren’t that uncommon. But these days, they seem to happen a lot more frequently and drag on for longer.
This is the fourth shutdown that President Donald Trump has presided over across his two terms in office — and this week, the current shutdown entered its third week. That means we’re now sitting in the second-longest shutdown in U.S. history, and it doesn’t look like lawmakers are about to strike a deal any time soon.
Prediction markets are betting this latest shutdown will surpass the existing 35-day record Trump set in 2019 before this is all settled and a new funding package is put into place. That creates a lot of political turmoil and market upheaval on Wall Street, but it also means a major cashflow catastrophe for millions of Americans.
Need more context? Let’s take a closer look at what the prediction markets are telling us, who’s not getting a paycheck because of all this, and what happens next.
What the Prediction Markets Are Telling Us About How Long the Shutdown Will Last
When the government shuts down and traders are looking for a little bit of wisdom, they often turn to prediction markets like Kalshi and Polymarket. These platforms offer users a real-time gauge of market expectations by using real money to price the probability of future events.
Why does Wall Street care about prediction markets, you might be asking?
At first glance, these prediction markets might seem like fun, small-time bets to pass the time. But it’s important to remember the economic damage of these shutdowns is never linear — and without a reliable flow of government-powered data, a lot of investors are in the dark right now.
Prediction markets like Kalshi and Polymarket offer real-time, crowd-sourced probabilities that act as surprisingly good sentiment indicators.
And right now, nobody on either platform seems to have high hopes about this shutdown.
Over on Kalshi, there’s a consensus that the shutdown will last at least 41 days. That would take us up to Nov. 11 until lawmakers stop butting heads in Washington and reach a compromise.
Unfortunately, a sizable 38% of traders are betting the shutdown lasts more than 45 days — so there’s a decent chance we’ll still be in the same position in mid-November.
The outlook is pretty much the same over on Polymarket.
Less than one in four traders are betting this shutdown will be over by the end of October. Most are putting their money down on a compromise in mid-November, with 63% saying they expect normality to resume by Nov. 15.
Unfortunately, that has serious financial implications for a lot of American families.
Who Doesn’t Get Paid During a Government Shutdown?
First thing’s first: It’s important to remember that not everybody is equally affected when the government shuts its doors.
In fact, a lot of private sector workers are virtually unaffected in terms of their take-home pay. But there are loads of federal workers who’ve been furloughed without pay, and plenty more who are expected to keep working without pay until the financial taps switch back on.
Here’s a quick breakdown:
- Non-essential federal employees: Estimates from the Congressional Budget Office indicate about 750,000 workers have been furloughed.
- Essential federal employees: Approximately 690,000 federal workers are expected to continue to work without pay. They’re supposed to get back pay once the shutdown ends.
- Federal contractors: This includes federal staff hired through third parties. Think cafeteria workers, security guards, and IT support staff. They aren’t getting paid now, and won’t get back pay when things go back to normal.
- Military personnel: Normally active duty military are required to work through a shutdown without pay. But on Oct. 15, Trump directed the Pentagon to move things around to get these paychecks out.
Translation: There are a whole lot of families who are struggling to pay bills this month without any income.
Making matters worse is that as the shutdown drags on, families in several states who rely on the Supplemental Nutrition Assistance Program (SNAP), are expected to soon be without benefits as funding for the food stamps program dries up.
Social Security payments are expected to continue for the duration of the shutdown.
What Could Come Next?
That’s the trillion-dollar question. Now that we’re entering week three of this political stalemate, there’s going to be an inevitable economic and market fallout.
First, we’re going to have to deal with a blackout of economic data.
When the government is in shutdown-mode, we miss out on key government reports that cover jobs and inflation. That means the Federal Reserve may need to push back any decisions around those further rate cuts everybody was expecting before the end of 2025.
And from a trader’s perspective, these prolonged shutdowns tend to erode confidence in the government itself. That pushes up Treasury yields, which has a direct impact on areas like mortgage deals and house prices.
Then, there’s the political implications.
Historically, prolonged shutdowns tend to weigh more heavily on incumbent parties. That means the next midterm elections are probably going to lean pretty heavily into this crisis and the amount of productivity lost, and the Democrats could see some gains as a result.
At the end of the day, the last big shutdown in 2019 cost the U.S. economy around $3 billion. If prediction markets are right about this latest shutdown, the economic fallout will be a record-breaker.
What does that mean for investors? Brace for extra volatility and uncertainty.
Shutdowns are always temporary, and this isn’t going to last forever. But economic scars do tend to linger — and if traders are right, this shutdown could leave a way deeper mark than many households could have expected
