Category: Policy Landscape

The government shutdown, now in its sixth week, continues to strain markets. Despite some bipartisan progress, the path to reopening remains uncertain as the economic fallout spreads across housing, infrastructure, and other sectors.

State of Play

• Early this week, bipartisan senators began exploring a short-term compromise to pair a continuing resolution (CR) with a vote on extending Affordable Care Act (ACA) subsidies. (CBS News, Nov. 5) 

• Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Hakeem Jeffries (D-NY) requested a meeting with President Trump, Senate Majority Leader John Thune (R-SD), and House Speaker Mike Johnson (R-LA) to discuss expiring ACA subsidies and a reopening framework. (Politico, Nov. 5)

• By midweek, a group of Senate Democrats signaled openness to a GOP plan that would extend government funding through January, include an appropriations package, and advance an ACA subsidy vote. (PoliticoPro, Nov. 6)

• President Trump urged Republicans to “get the government back open immediately,” linking GOP election losses to the stalemate, while Democratic leaders encouraged colleagues not to “cave” to pressure to compromise on key priorities. (CBS News | Politico, Nov. 5)

• Majority Leader Thune said Republicans are finalizing a “minibus” to serve as the vehicle for a deal, though hurdles remain on both sides. (PoliticoPro, Nov. 6)

• Expected travel delays remain a potential flashpoint in negotiations, as Transportation Secretary Sean Duffy and FAA Administrator Bryan Bedford said the federal government would reduce airline traffic by 10 percent at 40 locations beginning on Friday if the shutdown continues. (CBS News, Nov. 5)

• Majority Leader Thune intends to hold a vote to advance a funding package on Friday. Democrats have not signaled broad support for the measure, with progressives pushing to hold out while moderates grow weary of the shutdown’s toll on food aid and travel. (Axios, Nov. 6)

Implications for the Economy & CRE

• The Congressional Budget Office estimates the shutdown could lower U.S. GDP by $7-$14 billion, contingent on its length. It also anticipates that some losses will be permanent and that fourth-quarter growth may decline by 1-2 percentage points. (CBO, Oct. 29 | Reuters, Oct. 29)
  
  
• As the shutdown continues, federal permitting and financing pipelines remain frozen at HUD and EPA, slowing approvals, infrastructure tie-ins, FHA/HUD loan processing, and other critical CRE project milestones. (CRE, Oct. 29)
  
  
• HUD confirmed this week that it will extend funding for public housing operations and housing voucher payments through December. The move provides short-term relief for property managers and lenders in affordable housing markets, though funding beyond December remains uncertain. (Politico, Nov. 4)
  
  
• CRE leaders note that the economic strain is increasingly tied not to liquidity but to confidence and timing disruptions. CREFC characterizes the situation as a “confidence and timing headwind,” with capital still available yet deployed more cautiously amid growing uncertainty. (CRE Daily, Oct. 29)
  
  
• The ongoing blackout of federal economic data—including jobs and inflation reports—is reinforcing market caution, forcing lenders and investors to rely on private indicators and adopt more conservative underwriting and wider bid-ask spreads. (Bloomberg Law, Nov. 4)
  
  
• Property owners with federal tenants have reported delayed lease renewals and rent payments, creating operational friction and valuation uncertainty. (ENR, Nov. 1)

Supreme Court Weighs Limits on Presidential Tariff Powers

• Beyond Capitol Hill, the Supreme Court heard oral arguments on Tuesday over whether the International Emergency Economic Powers Act (IEEPA) permits the president to unilaterally impose sweeping tariffs on imports. (ABC News, Nov. 5 | Axios, Nov. 6)
  
  
• A majority of justices, including Amy Coney Barrett and Neil Gorsuch, expressed skepticism that Congress intended to delegate such expansive authority, questioning whether the power to “regulate” imports extends to imposing duties without explicit legislative approval. (New York Times Nov. 5)
  
  
• If the Court ultimately strikes down the broad tariff strategy, market attention will shift to the administration’s contingency plan for reimbursing billions in duties already paid, a move that could deliver meaningful near-term cash-flow relief for import-reliant developers, operators, and suppliers. (AP News | ConnectCRE, Nov. 5)
  
  
• However, uncertainty surrounding the scope and timing of any refund mechanism may continue to influence procurement and budgeting decisions across the CRE sector.

RER continues to urge Congress to move swiftly toward a bipartisan funding agreement that reopens the government, restarts critical permitting and data functions, and ensures continuity for housing, infrastructure, and financial programs essential to real estate investment and economic growth.

The federal government shutdown, now nearing its fifth week and on pace to become the longest in U.S. history, is showing early signs of bipartisan negotiation after weeks of stalemate. Lawmakers are facing mounting pressure to reach an agreement before critical deadlines affect food assistance and healthcare programs.

State of Play

• Bipartisan conversations have modestly increased this week as senators search for a path to end the impasse. Senate Majority Leader John Thune (R-SD) said talks “have picked up,” noting that deadlines often spur action. (PoliticoPro, Oct. 29)

• Despite limited optimism, lawmakers view progress onFY2026 appropriations as a potential vehicle to rebuild trust and advance a reopening framework. Still, with the Senate adjourned and the House out of session, finalizing a deal before key programs lapse remains difficult. (Roll Call, Oct. 29)

• Near-term pressure points include the exhaustion of Supplemental Nutrition Assistance Program (SNAP) and WIC benefits by the end of October, the start of Affordable Care Act (ACA) open enrollment on Nov. 1, and worsening transportation delays as air traffic controllers and TSA staff miss additional paychecks.

• Senate Minority Leader Chuck Schumer (D-NY) told reporters Tuesday that he believes Republicans will face “increased pressure to negotiate with us.” (Politico, Oct. 29)

• House Speaker Mike Johnson (R-LA) has kept the chamber out for more than a month, insisting that Democrats must first agree to reopen the government before broader spending or healthcare talks resume.

• However, rank-and-file senators from both parties report renewed engagement, with some GOP leaders predicting that centrist Democrats may soon support a compromise. (Politico, Oct. 29)

• Leader Thune said moderate Democrats are seeking an “off-ramp,” and he is willing to negotiate on extending ACA subsidies but only once the government reopens. Proposals include offering Democrats a vote on their own plan to continue the tax credits beyond December, and a possible meeting with President Trump to discuss ACA subsidies as early as next week. (The Hill, Oct. 30)

• In a series of Truth Social posts on Thursday, President Trump urged Republicans to eliminate the Senate filibuster, which currently requires 60 votes to advance legislation. Leader Thune has previously rejected changing the rule, calling the threshold “a bulwark against a lot of really bad things.” (CBS News, Oct. 31)

Economic Fallout

• The Congressional Budget Office (CBO) estimates the shutdown will cost the U.S. economy between $7 billion and $14 billion, depending on its duration, according to a new report released Wednesday. (CBO Letter, Oct. 29)

• In a letter from CBO Director Phillip Swagel to the Chairman of the House Budget Committee, the nonpartisan agency acknowledged that the real economic impact of the shutdown remains uncertain. (Politico, The Hill Oct. 29)

• A four-week shutdown would reduce real GDP by $7 billion, rising to $11 billion after six weeks and $14 billion after eight. (Bloomberg, Oct. 29)

• The CBO estimates the shutdown will reduce real GDP growth by 1 to 2 percentage points, with overall growth expected to recover after 2026—but some losses, particularly from federal worker furloughs, will be permanent.

• Lawmakers from both parties warn that the economic fallout will deepen if the impasse continues, threatening programs vital to housing, infrastructure, and financial markets.

Path Forward

• GOP leaders are exploring a continuing resolution (CR) that could extend government funding into mid-January or March, though several versions remain under discussion.

• Democrats oppose any measure that carries funding into next year without renewing the enhanced ACA subsidies set to expire in December.

RER continues to urge Congress to act responsibly to reopen the government and restore critical housing, insurance, and economic programs essential to real estate investment and growth.

The federal government shutdown—now in its fourth week and the second-longest in U.S. history—shows no sign of ending as partisan divisions deepen and the House remains in recess. (Punchbowl News, Oct. 24)

State of Play

• House Republicans have no plans to reconvene before next week, as negotiations remain stalled over renewing enhanced Affordable Care Act (ACA) subsidies, which expire at year’s end. (PoliticoPro, Oct. 23)

• Speaker Mike Johnson (R-LA) has kept the chamber out of session for more than a month, insisting that Democrats must first agree to reopen the government before any negotiations on broader health care or spending issues resume.

• In the Senate, lawmakers have rejected short-term funding bills 12 times since Oct. 1. The latest GOP-led continuing resolution (CR) to fund operations through Nov. 21 failed earlier this week.

• Senate Majority Leader John Thune (R-SD) has suggested separate votes to fund active-duty military members and air traffic controllers in an effort to increase pressure on Democrats, but the measures have also failed. (Politico | Washington Post, Oct. 23)

Economic and Operational Strains

• The most recent consumer price index showed annual inflation at 3% in September, keeping the Federal Reserve on track to cut rates next week. The shutdown has halted new economic data releases, prompting Fed Chair Jerome Powell to warn that the prolonged “data blackout” could complicate monetary policy. (PoliticoPro, Oct. 24 | Axios, Oct.24)

• Lawmakers on both sides warn that the economic fallout will deepen if the impasse continues, threatening programs vital to housing, infrastructure, and financial markets.

• EY-Parthenon Chief Economist Gregory Daco estimates that the shutdown will cost the U.S. economy roughly $7 billion per week. (BisNow, Oct. 12)

• U.S. GDP could decline by 15-20 basis points per week, though the near-term impact on commercial real estate remains limited, according to Marcus & Millichap. (Marcus & Millichap)

• Cybersecurity risks are rising as agencies such as the Cybersecurity and Infrastructure Security Agency (CISA) operate with minimal staff. Businesses report limited federal coordination following the expiration of the Cybersecurity Information Sharing Act of 2015, which had allowed companies to share threat data with the government. (Bloomberg, Oct. 22)

Looking Ahead & What’s at Stake

• Mounting political and economic pressure points are expected to intensify around Nov. 1, when funding shortfalls for Supplemental Nutrition Assistance Program (SNAP) and WIC nutrition benefits are projected, ACA open enrollment begins, and federal workers miss another paycheck—factors that could force both parties back to the negotiating table.

• Federal workforce: Hundreds of thousands of employees will miss a paycheck this week. The Trump administration has reprogrammed limited funds to pay military personnel and some law enforcement officers, yet mass layoffs are underway, and litigation over the firings has already begun.

• Transportation delays: Shortages of air traffic controllers and TSA employees are worsening as paychecks lapse. Speaker Johnson said he will not recall the House to vote on a standalone bill to fund these workers, while Senate leaders may soon force votes on military pay and nutrition benefits ahead of the Nov. 1 cutoff.

• Public assistance: Existing funding for the SNAP program is expected to run out by the end of October. The administration is assessing whether it can reallocate funds to sustain the program, which serves 42 million Americans.

• Health coverage: The start of ACA open enrollment on Nov. 1 is another flashpoint, as Democrats warn that expiring subsidies could drive higher premiums and intensify voter pressure to end the shutdown.

Path Forward

• Lawmakers have floated extending the current stopgap into December or early 2026, but no consensus has emerged. Democrats oppose any measure that provides funding into next year without renewing enhanced ACA subsidies that expire in December.

• The Senate is set to leave Washington until Monday, while the president departs for a 10-day trip to Asia, further dimming hopes for a near-term deal.

RER continues to urge Congress to act responsibly to reopen the government and restore critical housing, insurance, and economic programs essential to real estate investment and growth.