At the time of this writing a government shutdown is all but assured. As widely discussed, shutdowns are both market and economic nonevents but can create sensationalist headlines. The President has threatened to fire “scores of federal workers” in the event of a shutdown perhaps accomplishing what DOGE did not…a paring of the federal workforce.
Based upon recent data the federal workforce declined by 15,000 in August and only 97,000 workers have been fired/retired since its apex in January 2025. This is statistically insignificant for a 2.97 million workforce. Analysts had predicted over 500,000 jobs would have been eliminated by this juncture. On a percentage basis, the number of federal jobs lost is lower than the number of jobs Exxon just announced that it is eliminating.
Asking rhetorically, why should the federal workforce not focus upon efficiency and productivity and operate under similar rules/guidelines of private industry? All must remember there is no profit motive and bureaucratic power is measured by head count and budget.
An argument can be made the President is calculating the majority of Americans hold the view that the federal government is inept and inefficient, perhaps unfairly targeting DMV and the Post Office.
Many believe the country is walking into a proverbial buzz saw given its massive debt and unbridled spending. Interest expense on the national debt is now $1.2 trillion, up from about $350 billion five years ago. If there is no change, defined as the deficit continues to grow at a $2 trillion rate as projected for the foreseeable future and if interest rates remain around current levels, interest expense will be over $2 trillion per annum at the turn of the decade, an unsustainable level.
When will Washington acknowledge it is a spending issue not a revenue problem? The odds favor it will take a major crisis to adopt reforms required.
Speaking of jobs, the JOLTS Job Openings indicated very little change in the number of jobs available from the prior month. Available positions increased to 7.23 million for a revised 7.21 million reading in July. The hiring rate edged down to the lowest since June 2024, while layoffs were unchanged at “an extremely low level.”
Consumer Confidence however fell in September to a five-month low on concerns about a cooling labor market. The data was nominally lower than expected.
Equites were nervously unchanged as concerns are rising that key data may not be released, statistics used to make monetary policy decisions. Treasury yields were nominally lower across the curve.
Last night the foreign markets were up. London was up 0.67%, Paris up 0.42% and Frankfurt up 0.49%. China was up 0.52%, Japan down 0.85% and Hang Seng up 0.87%.
Futures are down about 0.6% on the shutdown. Gold rose and the dollar dropped.
Today’s release of the private sector ADP Employment Survey has taken new significance given it is one of the few employment reports that will be released as it is not government issued. An issue at hand is the correlation between the BLS report and ADP has waned considerably over the years. Since the Federal Reserve has stated monetary policy will primarily based upon jobs, will decisions between made in a vacuum?
The 10-year is up 4/32 to yield 4.14%.
