How Long Will This Last?
Author: Greg Valliere
October 1, 2025
It was clear, earlier this week, that much of Washington would shut down — with potentially ominous implications for the overall economy and the economic data that helps to set policy.
This is not “shutdown lite.”
The best-case scenario is that the government will shut down through October and possibly end just before the U.S. Thanksgiving on Nov. 27. The worst case is that this will drag on into the winter.
The latter scenario appeals to Donald Trump and his inner circle, who want to crush government as we know it; they have pledged enormous layoffs this fall as the shutdown persists. Job cuts of over half a million are possible.
The U.S. military elite, we are told, is furious and demoralized, with mass resignations likely in the coming weeks. The most intriguing angle is the likelihood that the military will be used to curb domestic crime, not foreign adversaries.
Troops soon many occupy several U.S. cities — Portland, Oregon may be next, and another dozen are on the target list.
The fiscal policy implications are huge. There’s no chance that defense spending will be reduced; another several billion will be spent on domestic programs, Ukraine and Gaza. The other fiscal bombshell will be the pullback by nervous consumers.
We’re in uncharted waters. Our late colleague Kevin McCreadie always preached that consumer confidence was crucial for the overall economy — but a lack of confidence is imminent. Ordinarily, that would prompt rate cuts from the Federal Reserve, but these aren’t ordinary times.
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