en-GB

gb_intm_classes

featured_gb_intm

intm

Intermediary

For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients).

UMAP Posts

Weekly Perspectives: Navigating the US government shutdown

Anthony Willis

Senior Economist, Multi-Asset Solutions team

Key Takeaways

The US government is in shutdown, stemming from a failure to agree a budget for the new fiscal year. As such, 750,000 government workers are on furlough – although Trump has suggesting they all be fired.
Economically speaking, the impact of such shutdowns – and there have been many – is relatively limited. In addition, financial markets seem unfazed.
A bigger concern is the lack of financial data, with the recent payroll report not being produced, and the potential to miss an upcoming inflation print.
The Federal Reserve, attempting to navigate a heavily data-driven environment, is flying blind.
With a reasonable chance that this shutdown could continue, what is currently a frustrating situation has the potential to become a little more problematic.

Transcript

This week I will be talking about the US government shutdown and whether it is truly a problem for financial markets.

It began last Wednesday, 1 October, and as of today – Monday 6 October – is still ongoing. Given the impasse between the Democrats and the Republicans, it may well continue for a while yet.

The shutdown stems from the US government’s failure to pass a budget for the new financial year. As the new fiscal year started last Wednesday, all non-essential government functions have been suspended until a budget is agreed. In practical terms, this means around 750,000 government workers have been furloughed.

President Trump has suggested that instead of furloughing these workers – sending them home without pay – they should be permanently dismissed. That remains to be seen, but it aligns with his broader agenda of reducing what he refers to as ‘deadwood’ in government.

From an economic standpoint, the impact is relatively limited. This is the 11th government shutdown since 1980. The most recent one, during Trump’s first term from 2018 to 2019, lasted 35 days and was estimated to have cost the US economy around $11 billion. Of that, about $3 billion in economic activity was never recovered, according to the Congressional Budget Office. While that is a significant figure, it is relatively small in the context of a $29 trillion economy.

As for financial markets, the impact has been minimal. US equity markets ended last week at all-time highs, and there has there been no major drama in bond markets. It is also worth noting that, unlike previous shutdowns, this one isn’t tied to a debt ceiling debate. The debt ceiling was raised back in August, by about $5 trillion, as part of the ‘Big Beautiful Bill’, so that particular issue is off the table for now.

The bigger concern is the lack of economic data. Due to the shutdown, the Bureau of Labor Statistics, which publishes key reports such as jobs data and inflation figures, is closed. Last week, we didn’t get the weekly jobless claims or the September jobs report – the non-farm payrolls. If the shutdown continues into mid-October, we won’t get the inflation report either.

This is particularly important because the Federal Reserve (Fed) is currently navigating a very data-dependent environment. Without access to this information, the Fed is essentially flying blind. While there are alternative data sources they can use, those will take on greater prominence in the coming weeks if no resolution is found.

Looking at prediction markets such as Polymarket, there is currently a 72% probability that the shutdown will extend into the middle of the month, and a 25% chance it could become the longest shutdown on record.

So, while this situation is more frustrating than dramatic for financial markets, the lack of information – especially around jobs and inflation – could become problematic. That said, from both an economic and market perspective, it is not a major drama. The longer it drags on, however, the more frustrating it becomes.

Thanks very much for watching, and I will be back very soon.

6 October 2025

2025年 October 06日

Key topics

Subscribe to insights

Get the most out of your email by tailoring the types of insights and information you would like to receive from us.

Latest articles

6 Oct 2025

2025年 October 06日

Weekly Perspectives: Navigating the US government shutdown

This week I will be talking about the US government shutdown and whether it is truly a problem for financial markets.

29 Sep 2025

2025年 September 29日

Weekly Perspectives: Japan at a crossroads?

This week we are looking at Japan – a country that's going to be in focus at the end of the week thanks to upcoming elections.

22 Sep 2025

2025年 September 22日

Weekly Perspectives: The Fed has stated cutting rates, but how far can they really go?

This week we are focusing on US interest rates – what changed last week and what we think is going to happen from here.

Key topics

Weekly Perspectives: Japan at a crossroads?

This week we are looking at Japan – a country that's going to be in focus at the end of the week thanks to upcoming elections.

22 September 2025

Weekly Perspectives: The Fed has stated cutting rates, but how far can they really go?

This week we are focusing on US interest rates – what changed last week and what we think is going to happen from here.

15 September 2025

Weekly Perspectives: What’s going on with the US labour market?

The past couple of weeks have seen a marked change in narrative around the US labour market.

Important information

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

For professional investors only.

This financial promotion is issued for marketing and information purposes only by Columbia Threadneedle Investments in the UK.

The Fund is a sub fund of Columbia Threadneedle (UK) ICVC III, an open ended investment company (OEIC), registered in the UK and authorised by the Financial Conduct Authority (FCA).

English language copies of the Fund’s Prospectus, summarised investor rights, English language copies of the key investor information document (KIID) can be obtained from Columbia Threadneedle Investments, Cannon Place, 78 Cannon Street, London, EC4N 6AG, email: [email protected] or electronically at www.columbiathreadneedle.com. Please read the Prospectus before taking any investment decision.

The information provided in the marketing material does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell or otherwise transact in the Funds. The manager has the right to terminate the arrangements made for marketing.

Financial promotions are issued for marketing and information purposes; in the United Kingdom by Columbia Threadneedle Management Limited, which is authorised and regulated by the Financial Conduct Authority; in the EEA by Columbia Threadneedle Netherlands B.V., which is regulated by the Dutch Authority for the Financial Markets (AFM); in Switzerland: Issued by Threadneedle Portfolio Services AG, Registered address: Claridenstrasse 41, 8002 Zurich, Switzerland. In the Middle East: This document is distributed by Columbia Threadneedle Investments (ME) Limited, which is regulated by the Dubai Financial Services Authority (DFSA). For Distributors: This document is intended to provide distributors with information about Group products and services and is not for further distribution. For Institutional Clients: The information in this document is not intended as financial advice and is only intended for persons with appropriate investment knowledge and who meet the regulatory criteria to be classified as a Professional Client or Market Counterparties and no other Person should act upon it.

Investment approach

Teamwork defines us and is fundamental to our investment approach, which is structured to facilitate the generation, assessment and implementation of good, strong investment ideas for our portfolios.

Funds and Prices

Columbia Threadneedle Investments has a comprehensive range of investment funds catering for a broad range of objectives.

Our Capabilities

We offer a broad range of actively managed investment strategies and solutions covering global, regional and domestic markets and asset classes.

Please confirm a few details about yourself to visit your preference centre

*Mandatory fields

Something went wrong, please try again

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

Visit preference centre

To view and control which insights you receive from us by email, please visit your preference centre.

Visit preference centre

CT Property Trust- Fund Manager Update

Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium

Weekly Perspectives: Navigating the US government shutdown

Key Takeaways

Subscribe to insights

Latest articles

Weekly Perspectives: Navigating the US government shutdown

Weekly Perspectives: Japan at a crossroads?

Weekly Perspectives: The Fed has stated cutting rates, but how far can they really go?

Related Posts

Weekly Perspectives: Japan at a crossroads?

Weekly Perspectives: The Fed has stated cutting rates, but how far can they really go?

Weekly Perspectives: What’s going on with the US labour market?

You may also like

Investment approach

Funds and Prices

Our Capabilities

Please confirm a few details about yourself to visit your preference centre

Thank you. You can now visit your preference centre to choose which insights you would like to receive by email.

To view and control which insights you receive from us by email, please visit your preference centre.

CT Property Trust- Fund Manager Update