Client Challenge
JavaScript is disabled in your browser.
Please enable JavaScript to proceed.
A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More
Client Challenge
JavaScript is disabled in your browser.
Please enable JavaScript to proceed.
A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More
Client Challenge
JavaScript is disabled in your browser.
Please enable JavaScript to proceed.
A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More
If any doubts remained about whether the Fed will be lowering its key interest rate, the budget loggerheads a few blocks away in the nation’s capital may have cemented the move.
Markets have priced in a 100% probability of an October cut and an 88% chance of another in December. Both are higher from when the lockout began at midnight Thursday.
Federal Reserve Chair Jerome Powell speaks during a news conference following a two-day meeting of the Federal Open Market Committee at the Federal Reserve on September 17, 2025 in Washington, DC.
Chip Somodevilla | Getty Images
If any doubts remained about whether the Federal Reserve will be lowering its key interest rate later this month, the budget loggerheads a few blocks away in the nation’s capital may have cemented the move.
Particularly if the impasse stretches out past a few days, Chair Jerome Powell and his fellow central bankers likely will err on the side of caution, which in this case would be a bias towards easing, Wall Street experts say.
“The US government shutdown and associated data delays nudge what we judged was already a firmly odds-on Fed rate cut in October further odds-on,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a client note.
Potential damage from the lockdown combined with ongoing concerns over the labor market will outweigh inflation concerns, he added.
“Our further lean into October – in spite of ongoing cautious language from Fed officials – reflects the even lower probability post-shutdown the Fed will get enough reassurance on labor market in time to rein in the soft default of successive cuts” through the end of the year that the Fed indicated in projections released last month, Guha said.
A narrow majority of officials at the September meeting of the Federal Open Market Committee indicated a preference of two cuts instead of one through the end of 2025. Some have expressed concern that tariffs could yet push inflation higher. Most, though, have said the impacts appear temporary and unlikely to halt a trend of gradual softening that will bring inflation back to the Fed’s 2% target in a few years.
In turn, markets have priced in a 100% probability of an October cut and an 88% chance of another in December, according to the CME Group’s FedWatch tracker of futures prices. Both are higher from when the lockout began at midnight Thursday.
Bank of America noted that history shows the lockdown likely will be over by the time the Fed meets Oct. 28-29 and officials will have updated data in hand. However, should the impasse continue until then, the bank’s economists see two reasons why FOMC members will vote to cut.
“First, it would take a solid [September] jobs report to keep an [October] hold in play. If the [September] jobs data are not available, Chair Powell will likely be inclined to push for another ‘risk management’ cut,” BofA economist Stephen Juneau wrote. “Second, the Fed would want to lean against downside risks from an extended shutdown, particularly if government workers are laid off.”
The Congressional Budget Office estimates that each day that government stays dark will mean the layoff of 750,000 workers with total compensation costs of $400 million.
In previous lockouts, workers were brought back on the job with backpay. However, President Donald Trump has threatened an examination on current federal payroll levels and the possibility that some furloughs could be permanent.
That could hurt an already-reeling labor market that saw private payrolls, according to ADP, decline by 32,000 in September. A broader Bureau of Labor Statistics count that includes government workers won’t be released as scheduled Friday if the shutdown continues. More
Client Challenge
JavaScript is disabled in your browser.
Please enable JavaScript to proceed.
A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More
Client Challenge
JavaScript is disabled in your browser.
Please enable JavaScript to proceed.
A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More
Private companies shed a seasonally adjusted 32,000 jobs during the month, the biggest slide since March 2023.
The report comes as the funding impasse in Washington, D.C., has led to the first government closure since late 2018 into early 2019.
ADP’s count takes on added significance as markets widely expect the central bank to cut another quarter point off its key borrowing rate.
Jobseekers speak with recruiters during a NYS Department Of Labor job fair at the Downtown Central Library in Buffalo, New York, US, on Wednesday, Aug. 27, 2025.
Lauren Petracca | Bloomberg | Getty Images
Private payrolls saw their biggest decline in 2½ years during September, a further sign of labor market weakening that compounds the data blackout accompanying the U.S. government shutdown.
Companies shed a seasonally adjusted 32,000 jobs during the month, the biggest slide since March 2023, payrolls processing firm ADP reported Wednesday. Economists surveyed by Dow Jones had been looking for an increase of 45,000.
In addition to the drop in September, the August payrolls number was revised to a loss of 3,000 from an initially reported increase of 54,000.
The report comes as the funding impasse in Washington, D.C. has led to the first government closure since late 2018 into early 2019. Failing a deal over the next two days, the Bureau of Labor Statistics’ nonfarm payrolls report for September will not be released, nor will the Labor Department put out the weekly jobless claims count on Thursday. The last time the BLS payrolls report was delayed was in 2013.
Federal Reserve officials count on the payrolls releases as they make decisions on interest rates. The Fed next meets Oct. 28-29, meaning there won’t be another payrolls report before then.
ADP’s count, then, takes on added significance as markets widely expect the central bank to cut another quarter point off its key borrowing rate.
Job losses spread across sectors during September, offset by a 33,000 increase in education and health services as schools reopened and health care continued its long streak of hiring.
Elsewhere, leisure and hospitality, a key sector for consumer demand, saw a loss of 19,000 as vacation season wound down. The other services category posted a drop of 16,000, while professional and business services was off 13,000, trade, transportation and utilities declined by 7,000 and construction lost 5,000.
On a broad scale, service providers decreased 28,000 and goods producers shed 3,000. Businesses with fewer than 50 employees lost 40,000, while companies with 500 or more employees added 33,000.
“Despite the strong economic growth we saw in the second quarter, this month’s release further validateswhat we’ve been seeing in the labor market, that U.S. employers have been cautious with hiring,” ADP chief economist Nela Richardson said.
The U.S. economy did expand 3.8% in the second quarter and is on pace for a 3.9% gain in the third quarter, according to the Atlanta Fed’s GDPNow data tracker.
However, concerns have increased over the state of the labor market, even with the unemployment rate at a relatively low 4.3%.
“My baseline outlook doesn’t see the labor market softening much further – but there are risks,” Boston Fed President Susan Collins said Tuesday. “In particular, I see some increased risk that labor demand may fall significantly short of supply, leading to a more meaningful and unwelcome increase in the unemployment rate.”
The consensus view for September was a nonfarm payrolls gain of 51,000 in the BLS report, which unlike ADP includes government jobs.
Even with the slowdown in hiring, wages in September grew 4.5% on an annual basis, little changed from August, ADP said. However, the rate of increase slowed to 6.6% for those changing positions, down half a percentage point from August.
ADP said it recalibrated past counts based on BLS benchmark revisions released in September. That resulted in the sharp downward move in the August figure of 43,000. “The narrative remains the same … of a slowing in hiring momentum,” Richardson said on CNBC. More
Client Challenge
JavaScript is disabled in your browser.
Please enable JavaScript to proceed.
A required part of this site couldn’t load. This may be due to a browser
extension, network issues, or browser settings. Please check your
connection, disable any ad blockers, or try using a different browser. More
