The US government shutdown! Non-farm payroll data is uncertain, emergency layoffs are sounding, and gold is still bullish.
2025-10-02 10:42:27
The U.S. federal government officially shut down on Wednesday (October 1), a move that will force hundreds of thousands of federal employees to take unpaid leave and cause a series of key projects and services to come to a standstill.
ADP data on Wednesday evening showed that private employment fell last month, and the follow-up impact of the continued shutdown remains to be seen. The market expects the Federal Reserve to announce an interest rate cut at its October meeting.
The unexpectedly weak ADP private sector payrolls report on Wednesday pointed to a cooling labor market, while other key employment data releases remained pending.
After seasonal adjustment, U.S. private sector jobs fell by 32,000 in September, the biggest drop since 2023. Economists surveyed by Dow Jones had generally expected jobs to increase by 45,000 that month.
The report came hours into the government shutdown, which has been ongoing for several hours. With the Labor Department nearly completely closed, the September nonfarm payroll report, originally scheduled for Friday, may not be released as planned .
In this context, the ADP employment data may be far more important than usual for economic policymakers and investors trying to assess the health of the labor market.
NASA employees and contractors working on the Artemis lunar exploration program, a partnership with Elon Musk's SpaceX and Jeff Bezos' Blue Origin, will continue to work during the government shutdown, according to an internal analysis obtained by CNBC.
NASA's human resources director, Kelly Elliott, made it clear in an email to employees on Wednesday that these employees "will have their salaries suspended during the shutdown period," but they must truthfully record their working hours and will be paid after the government resumes operations.
In a shutdown memo released on Monday, NASA's acting chief financial officer, Stephen Shinn, emphasized that the space agency will fully guarantee the "established operations" of the International Space Station, all satellite missions in the "operational phase," and "the Artemis program during any funding gap."
According to the emergency plan, NASA expects about 15,000 employees to go on leave, and requires about 3,000 employees (including full-time/part-time) to continue to work during the shutdown.
According to the U.S. Department of Labor, the government shutdown has delayed the release of key economic data, which may affect the announcement of the 2026 Social Security cost-of-living adjustment plan.
The Bureau of Labor Statistics, part of the Labor Department, was scheduled to release updated Consumer Price Index data on October 15. The Social Security Administration had planned to use that data this month to announce its 2026 cost-of-living adjustments.
But the Labor Department made it clear in its contingency plan released last Friday that the Bureau of Labor Statistics will suspend operations during the shutdown.
More than 74 million Social Security recipients nationwide were expected to receive an inflation-adjusted monthly payment increase next year. Forecasts released in September showed monthly incomes could rise by 2.7% to 2.8% in 2026, meaning the average retiree's monthly benefit would increase by about $54.
The U.S. government shutdown is expected to last at least until Friday, with lawmakers not returning to the Senate until Thursday after it adjourned for the Jewish holiday of Yom Kippur.
According to NBC News, this means that the Senate may not hold a new vote until more than two days after the shutdown begins.
Currently, lawmakers from both parties are still deadlocked over the government budget.
Bankrate senior industry analyst Ted Rothman noted that during the government shutdown, homebuyers who need to apply for certain loans through the Federal Housing Administration, the Department of Veterans Affairs and the U.S. Department of Agriculture may face processing delays.
But he also said that homebuyers who apply for government-guaranteed loans through Fannie Mae and Freddie Mac will not be affected.
Melissa Cohen, regional vice president of William Lovies Mortgage, said customers who need to purchase flood insurance through the National Flood Insurance Program also "expect transaction delays."
The National Association of Realtors said the NFIP's authority to issue new policies has lapsed, putting about 1,400 real estate transactions a day in limbo and preventing buyers in high-risk areas from getting flood insurance.
However, the association confirmed that existing flood insurance policies (including the 30-day grace period) will remain valid and transferable to new owners. NFIP claims processing will also continue, but its duration will depend on the duration of the shutdown.
The biggest immediate impact of the government shutdown on the housing market will be seen in mortgage rates.
Mortgage rates typically track the 10-year Treasury yield, which has fallen, so mortgage rates could fall accordingly. This would reverse the recent trend of mortgage rates reaching a three-week high.
The National Flood Insurance Program will also be affected. While the program will continue to pay claims for existing policyholders, it will not issue new policies or renew existing ones. According to the National Association of Realtors, the authorization suspension will affect approximately 1,300 real estate transactions per day.
Despite the delays, the property transactions are still expected to be completed after the government shutdown ends.
The Federal Housing Administration's mortgage program, which primarily offers low-down-payment loans to borrowers with lower credit scores, will continue to approve new single-family home loans, but processing capacity may be reduced, slowing the process for borrowers. Mortgages guaranteed by the Department of Veterans Affairs will also face similar challenges.
The exceptions are products such as home equity conversion mortgages and first-tier loans. According to the National Association of Realtors, FHA's key operations such as claims payment, loan servicing, loss mitigation and property management will continue to operate, but operations that require direct staff processing (such as some condominium project approvals) will be suspended.
The USDA will halt the issuance of new direct and guaranteed loans, and all scheduled direct loan transactions will be postponed. Submitted guaranteed loan commitment applications are still under review, but closing of unsecured loans is at the lender's own risk. Disbursement of existing construction loans will continue only as needed to maintain USDA property equity.
U.S. Vice President Vance: "If the government shutdown continues, we will have to lay off some employees."
"We don't like this, we don't have to do this, but we're going to do what's necessary to keep essential services running for the American people," Vance said at a White House press conference.
Asked why the Trump administration was predicting layoffs when past shutdowns hadn't resulted in such a result, Vance said: "We haven't made any final decisions."
The Trump administration will implement layoffs for federal workers within a day or two , Office of Management and Budget Director Russell Vought said in a conference call with House Republicans, according to people familiar with the matter.
White House press secretary Carolyn Levitt confirmed at a briefing that the layoffs are expected to begin soon, possibly within two days.
Vance also said that if the government shutdown continues, funding for nutrition programs for women, infants and children will run out next week.
At a press conference held 13 hours into the government shutdown, the White House stepped up pressure and accusations on Democrats, urging them to abandon key demands.
Vice President Cyrus Vance said at a White House press conference that policy differences should not be an "excuse for a government shutdown."
He and White House press secretary Carolyn Levitt took aim at the impasse over health care, reiterating their claim that Democrats intend to provide health care for "illegal immigrants."
Federal law prohibits health care funding for undocumented immigrants, and Democrats have not advocated for such measures.
Democrats have said they want to restore the health insurance coverage option some immigrants enjoyed before Trump's "big and wonderful" tax bill earlier this year, which has become a key sticking point in the impasse.
“I think it’s important to separate the health care policy discussion because it’s a completely different matter from the government shutdown,” Vance said. “We think we can get the government back online first and then have a discussion about what health care policy best serves the needs of the American people.”
Fitch Ratings said on Wednesday that the government shutdown will not affect the U.S. credit rating.
"The U.S. government shutdown has no short-term impact on the U.S. sovereign credit rating of AA+/Stable," the U.S. credit rating agency said in a press release.
However, Fitch said the shutdown "exposed long-standing policymaking shortcomings and political brinkmanship around budget issues."
Fitch downgraded the United States' long-term credit rating from AAA to AA+ through 2023, citing expectations of a "deteriorating fiscal situation" and growing "political deadlock."
The U.S. Securities and Exchange Commission website issued an announcement stating that there are currently only "very few" staff available to respond to emergency websites.
The agency said its electronic data collection system, called EDGAR, will continue to operate.
The program, called Electronic Data Gathering, Analysis and Retrieval (EDGAR), is a free, public database provided by the U.S. Securities and Exchange Commission (SEC) that collects documents submitted by publicly traded companies, mutual funds, exchange-traded funds (ETFs) and other entities that file reports with the SEC.
A statement on the U.S. Securities and Exchange Commission's official website pointed out that the agency "is equipped with staff to respond to emergencies, and its work focuses on its two core missions: maintaining market integrity and protecting investors."
Rep. Maxine Waters, a California Democrat and ranking member of the House Financial Services Committee, said in a statement that the SEC "has furloughed 91% of its staff, exposing financial markets and investors to enormous risks at a time when strong regulation is urgently needed."
Banks and most credit unions are continuing to operate normally during the shutdown, and their primary regulator is also operating as usual, people familiar with the matter told CNBC.
Banks are private companies whose regulators include the Federal Reserve and the Consumer Financial Protection Bureau, which are exempt from the annual appropriations process, according to the people, who asked not to be named discussing the government shutdown.
The Federal Deposit Insurance Corporation is funded by member banks, so industry deposit insurance will not be affected.
A JPMorgan Chase & Co. spokesman said the nation's largest bank "is continuing to operate normally."
The National Credit Union Administration, which insures credit union deposits, said it is still operating normally but warned of possible service disruptions "to credit union offices located on federal government property."
That warning was echoed by a major credit union trade group, which warned that "credit unions with branches in government buildings or on federal property may experience service disruptions."
The trade group said this could exacerbate the hardships faced by federal employees and military personnel who have been without pay during the government shutdown.
Another area that could be affected: Small business owners seeking federally guaranteed loans may not be able to apply for them.
The Small Business Administration, which works with banks to guarantee loans, said the shutdown is preventing "approximately 320 small businesses each day from accessing $170 million in SBA-guaranteed loan funds."
Members of Congress will still be paid during the government shutdown, but their staffs may not be so lucky.
Their compensation is protected by Article I of the Constitution, which states: "Senators and Representatives shall receive a Compensation for their Services, at such Amounts as shall be Assured by Law, and Paid from the Treasury of the United States."
However, those protections are not available to the people who work for them. Lawmakers can decide for themselves which subordinate employees are considered core staff and can continue to work .
The Capitol Visitor Center is closed and all tours are suspended. Cleaning services have also been suspended.
The Fair Treatment for Government Employees Act of 2019 ensures that all federal employees receive back pay, regardless of their work status during the government shutdown.
Most members of Congress earn $17,400 a year.
Wall Street analysts are looking back at history to try to predict what will ultimately prompt politicians to end the current government shutdown.
Daniel Tobon of Citigroup noted in a note to clients that the last government shutdown, in late 2018 during Trump’s first term, was resolved in part because frustration grew on all sides over the impasse. Delays are mounting at airports.
Raymond James analyst Ed Mills singled out the 2019 temporary suspension of flights at New York's LaGuardia Airport as an example of a crisis that forced politicians to act.
Tobon said the pressure is also being exacerbated by the fact that federal employees furloughed during the shutdown are not getting paid for the second time in a row.
Mills noted that the localized funding shortfall for Department of Defense staff has raised concerns about military pay payments.
Sarah Bianchi, a strategist at Evercore ISI, said federal government cuts could force Democrats to compromise.
"During the shutdown, the media will report on a range of local disruptions related to the shutdown, from longer-than-usual lines at TSA airports to small towns whose economies depend on the opening of nearby national parks," Bianchi wrote in a note to clients on Tuesday. "If any of these stories go viral, they could influence national opinion and spur a quicker compromise."
Gold has long been seen as a safe haven asset for investors, offering protection during times of economic and political turmoil.
The government shutdown on Wednesday prompted investors to seek safe-haven trades, sending gold prices soaring to a new record high of $3,895.28 an ounce.
During the Asian session on Thursday, spot gold fluctuated at a high level around $3,865 per ounce, basically maintaining the recent increase in gold prices. The bullish trend was significant and it is expected to test the highly watched $4,000 mark.
At 10:42 Beijing time, spot gold was trading at $3,863.99 per ounce.
ADP private employment report falls short of expectations, government shutdown officially begins
ADP data on Wednesday evening showed that private employment fell last month, and the follow-up impact of the continued shutdown remains to be seen. The market expects the Federal Reserve to announce an interest rate cut at its October meeting.
The unexpectedly weak ADP private sector payrolls report on Wednesday pointed to a cooling labor market, while other key employment data releases remained pending.
After seasonal adjustment, U.S. private sector jobs fell by 32,000 in September, the biggest drop since 2023. Economists surveyed by Dow Jones had generally expected jobs to increase by 45,000 that month.
The report came hours into the government shutdown, which has been ongoing for several hours. With the Labor Department nearly completely closed, the September nonfarm payroll report, originally scheduled for Friday, may not be released as planned .
In this context, the ADP employment data may be far more important than usual for economic policymakers and investors trying to assess the health of the labor market.
NASA to keep Artemis missions crewed during government shutdown, safeguarding partnerships with SpaceX and Blue Origin
NASA employees and contractors working on the Artemis lunar exploration program, a partnership with Elon Musk's SpaceX and Jeff Bezos' Blue Origin, will continue to work during the government shutdown, according to an internal analysis obtained by CNBC.
NASA's human resources director, Kelly Elliott, made it clear in an email to employees on Wednesday that these employees "will have their salaries suspended during the shutdown period," but they must truthfully record their working hours and will be paid after the government resumes operations.
In a shutdown memo released on Monday, NASA's acting chief financial officer, Stephen Shinn, emphasized that the space agency will fully guarantee the "established operations" of the International Space Station, all satellite missions in the "operational phase," and "the Artemis program during any funding gap."
According to the emergency plan, NASA expects about 15,000 employees to go on leave, and requires about 3,000 employees (including full-time/part-time) to continue to work during the shutdown.
A prolonged government shutdown could affect the release of Social Security cost-of-living adjustments.
According to the U.S. Department of Labor, the government shutdown has delayed the release of key economic data, which may affect the announcement of the 2026 Social Security cost-of-living adjustment plan.
The Bureau of Labor Statistics, part of the Labor Department, was scheduled to release updated Consumer Price Index data on October 15. The Social Security Administration had planned to use that data this month to announce its 2026 cost-of-living adjustments.
But the Labor Department made it clear in its contingency plan released last Friday that the Bureau of Labor Statistics will suspend operations during the shutdown.
More than 74 million Social Security recipients nationwide were expected to receive an inflation-adjusted monthly payment increase next year. Forecasts released in September showed monthly incomes could rise by 2.7% to 2.8% in 2026, meaning the average retiree's monthly benefit would increase by about $54.
The political deadlock is difficult to break, and the government shutdown is expected to last at least until Friday
The U.S. government shutdown is expected to last at least until Friday, with lawmakers not returning to the Senate until Thursday after it adjourned for the Jewish holiday of Yom Kippur.
According to NBC News, this means that the Senate may not hold a new vote until more than two days after the shutdown begins.
Currently, lawmakers from both parties are still deadlocked over the government budget.
The government shutdown is affecting the real estate market, and analysts say some home purchases may be hindered
Bankrate senior industry analyst Ted Rothman noted that during the government shutdown, homebuyers who need to apply for certain loans through the Federal Housing Administration, the Department of Veterans Affairs and the U.S. Department of Agriculture may face processing delays.
But he also said that homebuyers who apply for government-guaranteed loans through Fannie Mae and Freddie Mac will not be affected.
Melissa Cohen, regional vice president of William Lovies Mortgage, said customers who need to purchase flood insurance through the National Flood Insurance Program also "expect transaction delays."
The National Association of Realtors said the NFIP's authority to issue new policies has lapsed, putting about 1,400 real estate transactions a day in limbo and preventing buyers in high-risk areas from getting flood insurance.
However, the association confirmed that existing flood insurance policies (including the 30-day grace period) will remain valid and transferable to new owners. NFIP claims processing will also continue, but its duration will depend on the duration of the shutdown.
Mortgage rates may fall during the shutdown, while flood insurance claims will continue as normal.
The biggest immediate impact of the government shutdown on the housing market will be seen in mortgage rates.
Mortgage rates typically track the 10-year Treasury yield, which has fallen, so mortgage rates could fall accordingly. This would reverse the recent trend of mortgage rates reaching a three-week high.
The National Flood Insurance Program will also be affected. While the program will continue to pay claims for existing policyholders, it will not issue new policies or renew existing ones. According to the National Association of Realtors, the authorization suspension will affect approximately 1,300 real estate transactions per day.
Despite the delays, the property transactions are still expected to be completed after the government shutdown ends.
The Federal Housing Administration's mortgage program, which primarily offers low-down-payment loans to borrowers with lower credit scores, will continue to approve new single-family home loans, but processing capacity may be reduced, slowing the process for borrowers. Mortgages guaranteed by the Department of Veterans Affairs will also face similar challenges.
The exceptions are products such as home equity conversion mortgages and first-tier loans. According to the National Association of Realtors, FHA's key operations such as claims payment, loan servicing, loss mitigation and property management will continue to operate, but operations that require direct staff processing (such as some condominium project approvals) will be suspended.
The USDA will halt the issuance of new direct and guaranteed loans, and all scheduled direct loan transactions will be postponed. Submitted guaranteed loan commitment applications are still under review, but closing of unsecured loans is at the lender's own risk. Disbursement of existing construction loans will continue only as needed to maintain USDA property equity.
A 50-Year History of U.S. Federal Government Shutdowns in Pictures
Vance says some employees may have to be laid off if shutdown continues
U.S. Vice President Vance: "If the government shutdown continues, we will have to lay off some employees."
"We don't like this, we don't have to do this, but we're going to do what's necessary to keep essential services running for the American people," Vance said at a White House press conference.
Asked why the Trump administration was predicting layoffs when past shutdowns hadn't resulted in such a result, Vance said: "We haven't made any final decisions."
The Trump administration will implement layoffs for federal workers within a day or two , Office of Management and Budget Director Russell Vought said in a conference call with House Republicans, according to people familiar with the matter.
White House press secretary Carolyn Levitt confirmed at a briefing that the layoffs are expected to begin soon, possibly within two days.
Vance also said that if the government shutdown continues, funding for nutrition programs for women, infants and children will run out next week.
White House presses Democrats on health care demands
At a press conference held 13 hours into the government shutdown, the White House stepped up pressure and accusations on Democrats, urging them to abandon key demands.
Vice President Cyrus Vance said at a White House press conference that policy differences should not be an "excuse for a government shutdown."
He and White House press secretary Carolyn Levitt took aim at the impasse over health care, reiterating their claim that Democrats intend to provide health care for "illegal immigrants."
Federal law prohibits health care funding for undocumented immigrants, and Democrats have not advocated for such measures.
Democrats have said they want to restore the health insurance coverage option some immigrants enjoyed before Trump's "big and wonderful" tax bill earlier this year, which has become a key sticking point in the impasse.
“I think it’s important to separate the health care policy discussion because it’s a completely different matter from the government shutdown,” Vance said. “We think we can get the government back online first and then have a discussion about what health care policy best serves the needs of the American people.”
Fitch says government shutdown shouldn't impact long-term credit ratings
Fitch Ratings said on Wednesday that the government shutdown will not affect the U.S. credit rating.
"The U.S. government shutdown has no short-term impact on the U.S. sovereign credit rating of AA+/Stable," the U.S. credit rating agency said in a press release.
However, Fitch said the shutdown "exposed long-standing policymaking shortcomings and political brinkmanship around budget issues."
Fitch downgraded the United States' long-term credit rating from AAA to AA+ through 2023, citing expectations of a "deteriorating fiscal situation" and growing "political deadlock."
SEC severely understaffed during government shutdown
The U.S. Securities and Exchange Commission website issued an announcement stating that there are currently only "very few" staff available to respond to emergency websites.
The agency said its electronic data collection system, called EDGAR, will continue to operate.
The program, called Electronic Data Gathering, Analysis and Retrieval (EDGAR), is a free, public database provided by the U.S. Securities and Exchange Commission (SEC) that collects documents submitted by publicly traded companies, mutual funds, exchange-traded funds (ETFs) and other entities that file reports with the SEC.
A statement on the U.S. Securities and Exchange Commission's official website pointed out that the agency "is equipped with staff to respond to emergencies, and its work focuses on its two core missions: maintaining market integrity and protecting investors."
Rep. Maxine Waters, a California Democrat and ranking member of the House Financial Services Committee, said in a statement that the SEC "has furloughed 91% of its staff, exposing financial markets and investors to enormous risks at a time when strong regulation is urgently needed."
Banks and their regulators operated normally during the shutdown, but SBA lending stalled.
Banks and most credit unions are continuing to operate normally during the shutdown, and their primary regulator is also operating as usual, people familiar with the matter told CNBC.
Banks are private companies whose regulators include the Federal Reserve and the Consumer Financial Protection Bureau, which are exempt from the annual appropriations process, according to the people, who asked not to be named discussing the government shutdown.
The Federal Deposit Insurance Corporation is funded by member banks, so industry deposit insurance will not be affected.
A JPMorgan Chase & Co. spokesman said the nation's largest bank "is continuing to operate normally."
The National Credit Union Administration, which insures credit union deposits, said it is still operating normally but warned of possible service disruptions "to credit union offices located on federal government property."
That warning was echoed by a major credit union trade group, which warned that "credit unions with branches in government buildings or on federal property may experience service disruptions."
The trade group said this could exacerbate the hardships faced by federal employees and military personnel who have been without pay during the government shutdown.
Another area that could be affected: Small business owners seeking federally guaranteed loans may not be able to apply for them.
The Small Business Administration, which works with banks to guarantee loans, said the shutdown is preventing "approximately 320 small businesses each day from accessing $170 million in SBA-guaranteed loan funds."
Members of Congress continue to receive salaries during government shutdown
Members of Congress will still be paid during the government shutdown, but their staffs may not be so lucky.
Their compensation is protected by Article I of the Constitution, which states: "Senators and Representatives shall receive a Compensation for their Services, at such Amounts as shall be Assured by Law, and Paid from the Treasury of the United States."
However, those protections are not available to the people who work for them. Lawmakers can decide for themselves which subordinate employees are considered core staff and can continue to work .
The Capitol Visitor Center is closed and all tours are suspended. Cleaning services have also been suspended.
The Fair Treatment for Government Employees Act of 2019 ensures that all federal employees receive back pay, regardless of their work status during the government shutdown.
Most members of Congress earn $17,400 a year.
What would convince politicians to end the government shutdown?
Wall Street analysts are looking back at history to try to predict what will ultimately prompt politicians to end the current government shutdown.
Daniel Tobon of Citigroup noted in a note to clients that the last government shutdown, in late 2018 during Trump’s first term, was resolved in part because frustration grew on all sides over the impasse. Delays are mounting at airports.
Raymond James analyst Ed Mills singled out the 2019 temporary suspension of flights at New York's LaGuardia Airport as an example of a crisis that forced politicians to act.
Tobon said the pressure is also being exacerbated by the fact that federal employees furloughed during the shutdown are not getting paid for the second time in a row.
Mills noted that the localized funding shortfall for Department of Defense staff has raised concerns about military pay payments.
Sarah Bianchi, a strategist at Evercore ISI, said federal government cuts could force Democrats to compromise.
"During the shutdown, the media will report on a range of local disruptions related to the shutdown, from longer-than-usual lines at TSA airports to small towns whose economies depend on the opening of nearby national parks," Bianchi wrote in a note to clients on Tuesday. "If any of these stories go viral, they could influence national opinion and spur a quicker compromise."
Gold prices fluctuated at high levels, and investors sought safe-haven assets
Gold has long been seen as a safe haven asset for investors, offering protection during times of economic and political turmoil.
The government shutdown on Wednesday prompted investors to seek safe-haven trades, sending gold prices soaring to a new record high of $3,895.28 an ounce.
During the Asian session on Thursday, spot gold fluctuated at a high level around $3,865 per ounce, basically maintaining the recent increase in gold prices. The bullish trend was significant and it is expected to test the highly watched $4,000 mark.
At 10:42 Beijing time, spot gold was trading at $3,863.99 per ounce.
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