On 1 October 2025, Congress and the administration were unable to pass funding legislation necessary for a new fiscal year, leading them to fail and cause a government shutdown. [ABC News +2Reuters].
At its core, a shutdown occurs when funding runs out due to disagreement over appropriations bills or continuing resolutions, leaving many government agencies without legal authority to spend their budget. According to Wikipedia (+1),
Why the shutdown happened The shutdown resulted from an impasse between Republicans and Democrats over budget issues. While the House approved a short-term funding bill, Senate did not due to Democratic insistence of including additional health-care subsidies and provisions that extended beyond its scope. For more details see Wikipedia +2 or Reuters for updates.
+2 Furthermore, the Office of Management and Budget (OMB) issued a memo instructing agencies to initiate orderly shutdown plans once funding had lapsed, signaling its seriousness.
Al Jazeera. +1
Political Strategy, Ideological Divisions Over Spending And Policy And Breakdowns In Negotiations All Contributed. Harvard Kennedy School Now What: Immediate Effects

With the shutdown in effect:

Many non-essential federal services will be reduced or suspended, including national parks and museums which may close or operate at greatly reduced capacity (Wikipedia).
Around 750,000 federal employees will likely be put on unpaid leave until the shutdown ends, while those considered essential (such as air traffic controllers, TSA officers and border security) continue working often without pay until it concludes. PBS and USAFacts both estimate this figure at over 750,000 employees being furloughed; with many others continuing working often without pay until it does end. PBS/USAFacts estimate around 640,000 would remain furloughed in totality (includes “essential”) positions). PBS +2 >> USAFacts +2
Some benefits and programs that depend on annual appropriations could experience delays or suspension depending on agency funding flexibility and state funding options. Parchet Brittany Pettersen
Although disruptions occur, certain core functions remain intact: military operations, law enforcement and disaster-response remain active – though may require greater resources or be delayed in delivery.
NCSL The economy takes a hit: reduced consumer spending from furloughed workers, delayed contracts and uncertainty all add up; analysts estimate each week of shutdown can shave off between 0.1-0.2% off quarterly growth according to estimates by Thomson Reuters +1 (formerly NCSL). What comes next are possible outcomes and potential solutions.

Going forward, several scenarios are possible:

Congress could pass either a continuing resolution or full appropriations bill to reopen funding, with negotiations currently taking place and some senators trying to reach an agreement.
As the government shutdown drags on, its costs and damages increase: permanent job losses among federal workers or contractors, wider economic effects, and an erosion of public services. Wikipedia
As long as a shutdown continues, the likelihood of “lost output” not being fully recovered increases — particularly for contractors or smaller businesses with cash flows disrupted.
Public opinion may shift as citizens affected by delays or closures become frustrated with lawmakers who seem unable to resolve an impasse, placing further strain on lawmakers to address it.
The Washington Post
Implications and significance.

A government shutdown reflects deeper political dysfunction and has real ramifications for people’s lives, from federal employees to beneficiaries of programs like food assistance. Millions could lose benefits such as food stamps if funding for such programs doesn’t come back online quickly enough, according to estimates provided by The Economic Times.
Mistrust of government institutions also reduces service delivery, delays regulatory actions, and can erode trust between citizens and government institutions.

Overall, the U.S. government shutdown began due to an inability of Congress and President Trump to reach agreement on funding issues amidst partisan gridlock. While essential services continue running normally, many services have been suspended while hundreds of thousands of workers have been furloughed; progress depends on whether Congress and Trump come to an agreement soon – otherwise economic and social impacts become ever more pronounced as more people furlough themselves than are necessary.