A partial US government shutdown appears imminent this week as Republicans and Democrats remain at an impasse over budget negotiations, raising the risk of economic disruption just as inflationary pressures and job‑market uncertainty weigh on growth.
With funding set to lapse at midnight Tuesday (Wednesday noon, Manila time) talks between President Donald Trump and congressional leaders showed little sign of progress.
Senate negotiations remain gridlocked over healthcare funding, with Democrats demanding restoration of Medicaid cuts and extension of Obamacare subsidies. Republicans, lacking a filibuster‑proof majority, must win over Democrats to pass any stopgap measure.
Unlike in the Philippines, US doesn’t have a law that allows the automatic reinstatement of the national budget from the previous year if Congress fails to pass new spending program.
If no agreement is reached, many federal operations will cease—except for essential programs like Social Security and the military.
The Bureau of Labor Statistics warned it would suspend publication of the September jobs report, a pivotal data point for markets and the Federal Reserve. Economists caution that such a data blackout would impede policy decisions and increase volatility.
Further stoking concern, the Trump administration has signaled it may replace traditional furloughs with permanent layoffs in the event of a shutdown, deepening potential damage across federal agencies.
Goldman Sachs estimates up to 900,000 workers could be affected, echoing paralyzing scenes from the 35‑day shutdown in 2019.
Extended disruptions may delay cost‑of‑living adjustments, slow consumer and business confidence, and undermine the credibility of government data as agencies face shrinking resources and staffing cuts. In sum, the consequences of failed compromise would stretch far beyond Washington—impacting markets, households, and the broader economic recovery.
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