Comments based on information available as of 6:55am CT on 10/03/2025

Growth: Shutdown Slowdown

“What, me worry?” But there may be more than meets the eye to this government shutdown. The pain individuals feel who are furloughed should not be minimized. However, for the nation as a whole, shutdowns don’t leave a dent. What is different this time is the possibility of further employment reductions at the federal level. Being furloughed and knowing you will get backpay is very different from being laid-off and trying to find work in a “no hire, no fire” job market.

Inflation: A Road To Nowhere

Inflation went from 2% in early April to about 3% in August. If the government shutdown persists, we might not get the September numbers when they’re scheduled to come out on October 15th. Gasoline and agriculture prices were rising in the first half of September before retreating a bit. So, it’s likely that very little progress would be made to get inflation back towards 2%. The Fed’s fight against inflation is a long road, but right now it feels like a road to nowhere.

Policy: Flying Blind

During the 2013 government shutdown, then-Federal Reserve Chairman Ben Bernanke offered, on behalf of the Federal Reserve, to pay for the Bureau of Labor Statistics’ (BLS) core economic data collection. Maybe that idea should be revisited. The Fed relies heavily on the data from all the parts of the federal government and those data releases get postponed and the collection can be put on pause. It’s not a great setup for a data-dependent Fed.

Looking Ahead: Cash Is King

For individuals who might need to ride through a federal employment furlough, having a rainy day fund can be a lifesaver. For skittish investors, having a good liquidity plan can help ease some anxiety. For investors, the value of a firm comes from the cash flows it generates. The phrase “cash is king” dates back to at least the 1890s, but it seems to always be relevant.