The US Senate has taken a major step toward re-opening the government after a group of moderate Democrats broke with their party leaders and voted to support a deal to end the record-breaking shutdown.

Democratic senators broke ranks to join Republicans in a 60-40 vote passing a compromise deal, sparking intra-party backlash.

Government shutdowns have become a recurring feature of US politics, the product of partisan standoffs over spending that force federal agencies to halt a wide range of services.

The latest shutdown — the third under President Donald Trump across his two terms — began at midnight on October 1, when Congress failed to pass a stopgap funding measure, triggering the nation’s first government closure in almost seven years.

Democrats are demanding that a stopgap bill include an extension of Affordable Care Act premium subsidies and a reversal of Medicaid funding cuts — conditions Republicans have rejected, leaving the two sides deadlocked and the shutdown unresolved.

The US government runs on 12 appropriations bills passed each year by Congress and signed by the president. In fiscal years like the current one, when all 12 bills aren’t adopted by the October 1 start of the fiscal year, Congress and the president keep the machinery of government humming by passing short-term extensions of current funding, known formally as continuing resolutions, or CRs.

If they can’t agree to a CR, the US government has what’s called a funding gap and federal agencies may need to take steps to shut down.

There have been 15 shutdowns since 1981. The second longest shutdown in US history — over Trump’s insistence on adding $5.7bn to the budget for a wall on the border with Mexico — spanned 35 days in late 2018 into early 2019.

Not only is the ongoing shutdown the longest in US history, but it’s likely going to be the most economically damaging.

Historically, the economic damage from shutdowns is fleeting, quickly reversing when the government reopens. However, the 40-day lapse in funding that began on October 1 is already dealing a significant – albeit temporary – blow to the world’s largest economy.

Millions of Americans are not getting food stamp benefits needed to feed their families. Roughly 1.4mn federal employees haven’t been paid – even though many are still working.

And investors and policymakers are in the dark about what’s happening in the US economy because the release of government data has stalled.

Two monthly jobs reports have fallen victim to the shutdown and a key inflation snapshot due in the coming week is also in jeopardy, illustrating a thickening data fog for a Federal Reserve that’s the most divided in recent memory.

The nonpartisan Congressional Budget Office estimates the shutdown will reduce GDP by one to two percentage points.

“Those effects will intensify the longer the shutdown lasts,” the CBO wrote in a letter last week.

Although “most of that decline” will eventually be recovered, CBO estimates between $7bn and $14bn will be permanently lost during the shutdown.

Goldman Sachs is now penciling in weaker fourth-quarter GDP growth of just 1%. That would represent a significant slowdown from the 3% or even 4% growth that was projected for the third quarter.

“The current shutdown looks likely to have the greatest economic impact of any shutdown on record,” according to Alec Phillips, chief political economist at Goldman Sachs.

Estimates of the economic impact range from $7bn to $16bn per week, with the White House’s Council of Economic Advisers, a US government agency, forecasting a weekly loss of $15bn.

A recent CBS News poll found that 54% of Americans said they are “very concerned” about how the shutdown is affecting the economy.

Even if the shutdown ends in the coming days, it will likely slow down the growth of real gross domestic product, without considering inflation — by 1.15 percentage points during the fourth quarter, according to Goldman Sachs.