Current funding for most government programs expires on September 30.
If lawmakers fail to pass a new budget by that time, a significant portion of government functions will come to a halt, which, according to Goldman Sachs strategists, will lead to a 0.2% decline in US economic growth for each week.
A partial government shutdown that does not interfere with essential functions such as military or Social Security payments is considered less dangerous to the economy than a failure to raise the national debt limit, something lawmakers narrowly avoided earlier this year.
This time, however, investors may be more sensitive to the shutdown.
Failure to pass a budget would underscore the gridlock and political instability that ratings agency Fitch cited as the reason it downgraded the US credit rating in August, a move that rattled markets last month.
In addition, the shutdown could weaken the economy at a time when various factors, including the Federal Reserve’s tightening monetary policy and the resumption of student loan payments, pose a threat to growth, analysts said.