U.S. Government Shutdown: Thousands Furloughed as Trump Warns of Layoffs
The U.S. federal government has entered a shutdown, commencing on October 1, 2025. This impasse, due to a budget disagreement between the Republican-controlled presidency and Senate, led by President Donald Trump, and the Democratic Party's significant presence in Congress, has resulted in thousands of federal workers being furloughed. President Trump has warned of potential permanent layoffs.
The shutdown began after Congress failed to reach an agreement on funding. Services such as the monthly unemployment report and access to national parks are now impacted. Over half a million employees, predominantly from the Defense Department's civilian workforce, have been furloughed. An extended shutdown could further weaken the labor market and affect the broader economy, particularly in the D.C. area where many non-furloughed workers will continue to work without pay.
Historically, government shutdowns have not significantly affected the stock market today. The S&P 500 has averaged a gain of 0.05% during the 20 shutdowns since 1976. On the first day of the current shutdown, the S&P 500 finished up 0.3%, demonstrating investors' resilience.
The ongoing government shutdown has led to significant disruptions in services and worker compensation. While the stock market today has shown resilience, the potential for permanent layoffs and further labor market weakening raises concerns about the economy's stability, particularly in the D.C. area.
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