The federal government has officially shut down for the first time since December 2018. Congress failed to approve a spending bill before fiscal 2026, which began on Oct. 1. How the funding lapse impacts the economy depends on its duration. Hundreds of thousands of federal workers will miss paychecks, certain services could be halted, and some federal payments may be delayed.
Additionally, the Labor Department said economic data scheduled for release during the shutdown will not be available. That could sink the stock market. Investors will miss a key jobs report on Oct. 3, the timing of which was consequential because the labor market has recently shown signs of weakness due to tariffs. Investors may also miss an inflation report on Oct. 15.
The Social Security Administration also needs that inflation report to determine the cost-of-living adjustment (COLA) for 2026. How much benefits increase next year depends on how much consumer prices increased between July and September. Without that data, retired workers will be left in the dark concerning the 2026 COLA. Read on to learn more.
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When will the federal government reopen?
The Committee for a Responsible Federal Budget says government shutdowns tend to cost (rather than save) money. That's because it takes time and effort to discontinue operations, implement contingency plans, and restart operations. But there are indirect costs for the economy as well.
Economists estimate as many as 800,000 federal employees could be furloughed, which could slow consumer spending because workers would temporarily go without pay and some federal payments could be delayed. The Trump administration also threatened to fire more employees if funding lapsed, which could further weigh on the economy.
The federal government will not reopen until Congress passes a bill to fund discretionary spending. Members of the House will not return to Washington until Oct. 7, meaning the shutdown will last through the middle of next week at a minimum, but it could drag on beyond that point. The longest shutdown on record was a 35-day period that started in late 2018, according to the Congressional Research Service.
What can we guess about Social Security's 2026 COLA?
The Social Security Administration needs September CPI (Consumer Price Index) data to calculate the 2026 COLA (cost-of-living adjustment). That report is due on Oct. 15, but its release will be delayed if the government remains closed. In that case, Social Security beneficiaries would not learn anything definitive about the COLA until Congress passes a spending bill that restores federal funding.
However, available inflation data is enough to make an educated guess concerning how much benefits will increase next year. COLAs are based on the percent change in the CPI during the third quarter, which runs from July through September. To date, the relevant measurements were 2.5% in July and 2.8% in August, and the September reading is expected to trend higher as tariffs drive inflation. So, here are three plausible outcomes:
- September CPI increases 2.8%: The 2026 COLA will be 2.7%
- September CPI increases 2.9%: The 2026 COLA will be 2.7%
- September CPI increases 3%: The 2026 COLA will be 2.8%
The 2026 COLA is unlikely to be smaller than 2.7% because inflation would have to slow sharply, nor are benefits likely to increase more than 2.8% because inflation would have to accelerate sharply. Indeed, The Senior Citizens League says the most likely outcome is a 2.7% COLA, but independent policy analyst Mary Johnson thinks benefits will increase 2.8% next year.
Here's the bottom line: Social Security recipients will continue to collect benefits during the federal shutdown, but the 2026 COLA announcement will be delayed if the government remains closed by Oct. 15. However, assuming benefits increase 2.7% to 2.8% next year, the average retired worker will receive an addition $54 to $56 per month.
