White House adviser says shutdown may push US Q4 growth into negative territory

A Director of the National Economic Council of the United States, Kevin Hassett, cautioned that the US economic growth might drastically drop if the ongoing federal shutdown continues. 

During an interview on CBS’s “Face the Nation” on Sunday, November 9, Hassett noted that the lack of air traffic controllers is causing significant travel disruptions as Thanksgiving approaches.

“Thanksgiving is one of the busiest times of the year for the economy… and if people can’t travel during that period, we could see a negative quarter for the fourth quarter,” the White House economic adviser explained. 

Flight delays in the US hinder traveling as Thanksgiving approaches 

On Sunday, US-based airlines canceled over 2,200 flights, raising concerns among passengers. To address these concerns, the country’s Secretary of Transportation, Sean Duffy, cautioned that air travel will slow down to a “trickle” because air traffic control was experiencing staffing shortages as Thanksgiving draws near. He attributed this situation to the ongoing federal shutdown.

His statement came after several airlines reportedly faced their third consecutive day of mandatory flight cuts due to delays and cancellations that interfered with travel schedules on Saturday, November 8.

Notably, the federal shutdown has lasted 40 days, resulting in a shortage of air traffic controllers, who, like other federal employees, have not received pay for weeks.

“It’s only going to get worse… during the two weeks before Thanksgiving, you’ll see air travel drop significantly,” Duffy stated on CNN’s “State of the Union.” 

These US flight delays have disrupted the plans of millions of individuals, as most of them had preferred to travel before Thanksgiving. This event is one of the significant holidays in the country, taking place on November 27 this year. 

Still, Duffy warned that many individuals will be unable to board airplanes as there will be insufficient flights if this situation remains unchanged. Following his remarks, analysts noted that Sunday was the worst day for flight cancellations since the shutdown kicked off on October 1. 

Meanwhile, the Federal Aviation Administration (FAA) has instructed airlines to reduce their daily flights by 4% starting this Friday. This order will be enforced at 40 major airports because of safety concerns regarding air traffic control. Sources mentioned that these flight cutbacks are set to escalate to 6% on Tuesday and reach 10% by November 14. 

Following the FAA’s instructions, many airlines have already made their cancellations for the upcoming days public. For example, United Airlines shared its intention to cancel 190 flights on Monday and 269 on Tuesday, according to the company.

The ongoing federal shutdown raises tension in the airline industry 

On Sunday, 4:20 p.m. ET (2120 GMT), at least 2,215 US flights had been cancelled and more than 7,200 delayed as conditions worsened, according to FlightAware, a flight tracking website. Additionally, the FAA reported that 12 control towers experienced staffing issues earlier.

Apart from these challenges, Duffy highlighted that more air traffic controllers have retired since the federal shutdown started on October 1. This was after he told reporters that the FAA is short about 1,000 to 2,000 controllers for full staffing.

He further explained that he paid skilled controllers to perform their task and not retire. According to him, he had about four controllers retiring per day before the shutdown, and now the number has increased to around 15 to 20 per day.

On Saturday alone, approximately 1,550 flights were canceled and 6,700 were delayed. That was up from 1,025 cancellations and 7,000 delays reported on Friday.

Sources close to the situation mentioned that Airline officials privately stated that they could schedule and plan very few flights because several were delayed. They expressed worry about how the system would function if staffing problems further deteriorate. Meanwhile, the Senate is moving toward a deal to reopen the government, which would fund operations through January 2026.

Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.