Government Shutdown's Impact on Contractors and Small Businesses

    Over the past month, the impact of the ongoing government shutdown has begun to weigh heavily on businesses that work with the federal government. According to a new report released Thursday by the U.S. Chamber of Commerce, government contractors have collectively lost around $12 billion since the shutdown began on October 1.

    The report, which is being sent to members of Congress, highlights that 65,500 small businesses across the country are losing roughly $3 billion each week. These companies provide a range of services — from high-tech manufacturing and office supplies to landscaping — and many rely on government contracts for a large portion of their income.

    Neil Bradley, executive vice president of the Chamber of Commerce, said in a letter that while federal employees are guaranteed back pay once the government reopens, contractors have no such protection. “When the government reopens, rarely are contractors made whole,” Bradley wrote, noting that many purchases are permanently lost during shutdowns.

    In order for the shutdown to end, there needs to be a "bipartisan" short-term spending bill which is all but bipartisan as of now. The Democratic party is pushing for the inclusion of ACA tax credit extensions before they agree on a deal. 

    With pressure continuing to build on getting a deal done, it will be interesting to see how the contractors continue to deal with this with no promise that they will get the pay they once agreed upon with another party. 

Link to Article: https://www.cnbc.com/2025/10/30/government-shutdown-business-chamber.html 

Fed Chair Powell Says Don't Count on a December Rate Cut

 On October 29th, the Fed cut rates by a quarter of a basis point to combat unemployment from surging.  This cut dropped the benchmark lending rate to a range of 3.75% - 4%.  This is the first time that there has been a "dueling dissent" in the decision of what to do with the Fed rates.  There were two opposing views on opposite policies.  One to cut rates by half a basis point and one to leave the rates as they are.  Along with these dueling perspectives, the decisions for the Fed rates are also occurring when there has been no government employment data as a result of the shutdown.  Employment is struggling, and the addition of jobs is at its lowest it has been since 2010.  Powell has said that the decisions are currently being made during a time of blindness for the Fed.  He has made it very clear that it is hard to make decisions about the conditions of the U.S. economy.  Data trends and private sector data that have been released by ADP are incite into the economy but are nothing compared to the government data that is typically used and considered the "gold standard".

Along with concerns about the economy's status and the lack of information due to the government shutdown, there are concerns about inflation rates.  Powell has said that, as of now, we are not seeing significant inflation, but this is mainly due to the tariffs and that businesses are doing a good job in not passing the increased expenses from tariffs onto customers.  He says, though, that because of the time it takes for tariffs to reach consumers, some inflation is going to occur.  Although we aren't seeing high inflation right now, tariff inflation is expected.  The September CPI showed unexpectedly reasonable values; however, this is likely to change as price pressures are apparent with the new tariffs.  With all this being said, the short-term inflation is hoped to be stopped by the tariffs, and this is what drove the most recent Fed rate cut.  The Fed will be in a tricky position if crucial government data is still not released in the near future as a result of the government shutdown.

https://www.cnn.com/2025/10/29/economy/fed-october-rate-decision

Global Commodity Prices Hit Six-Year Low, Easing Inflation but Raising New Concerns

 Global commodity prices have dropped to their lowest level in six years, according to a new World Bank report released this week. Prices for energy, metals, and food have all been falling as demand slows and supply improves around the world.

Energy prices, including oil and natural gas, are expected to fall by about 12% next year, while food prices could drop around 6%. This is helping cool inflation in many countries, giving consumers and businesses a bit of relief after years of high costs. Economists say that lower commodity prices are one reason inflation might finally return closer to normal levels by next year.

However, the report also warns that this drop reflects a slowdown in the global economy. Countries that depend on exporting oil, metals, or crops are being hit hard by lower prices, which could lead to weaker job growth and less government spending in those regions.

There’s still a lot of uncertainty ahead. If interest rates keep falling, demand could pick back up, but ongoing trade tensions and tariffs could make things unpredictable. Some analysts also point out that while inflation is easing, the slowdown in demand isn’t necessarily good news for long-term growth.

Overall, the decline in commodity prices is a mixed signal. It’s helping to ease inflation, but it also shows that the global economy may be losing some strength heading into 2026.

Source: https://www.worldbank.org/en/research/commodity-markets

Federal Reserve cuts key interest rate in bid to boost job market

The Federal Reserve today (Wednesday 29th October 2025) cut its benchmark interest rate by 0.25%, which is its second rate cut this year, in order to stimulate economic activity in the country and to boost investment. This decision was made despite concerns about persistent inflation and fairly low unemployment rates because job hiring is low and firms seem to be laying off workers indicating that the labor market is sluggish.

There isn't really a clear way forward because the US economy is very uncertain. The Chair of the Fed, Jerome Powell compared the current economic uncertainty to driving in the fog and emphasized slowing down. The rate cut aims to make borrowing cheaper for consumers and businesses but it also risks further fueling inflation, which recently rose to 3%, above the Fed’s 2% goal. It's going to be interesting to see how the economy progresses and what the Fed will do on December 10th when it makes its next rate decision.

This rate cut comes as the US economy faces a dilemma with the labor market cooling while prices are still high. Hiring rates have collapsed to levels last seen in the years following the 2008 global financial crisis, and the ongoing government shutdown has also made it harder to assess the economy, as key data releases are delayed. And economists say lower interest rates can sometimes worsen inflation by increasing economic activity. Jerome Powell acknowledges this risk especially looking at the effects of President Trump's tariffs that suggest that inflation could continue to increase.

The issue also is that, the economy is showing mixed signals with strong GDP growth driven by an AI investment boom. Powell described the rate cut as a risk management step to balance the conflicting trends in the economy.

There is disagreement within the Fed about what to do next. Powell stressed that another rate cut at the December meeting is not guaranteed. Some policymakers urge caution, warning that lowering rates too quickly could worsen inflation, which is also being driven by tariffs. And some analysts believe that the tension between elevated inflation and the labor market cooling is easing, but not for reasons that look good for the broader economy. 

Ultimately, the Fed is navigating a complex situation because inflation remains stubborn, the labor market is fragile, and government shutdown has made economic data incomplete. Fed governor, Christopher Waller made a really good point here, "either economic growth softens to match a soft labor market, or the labor market rebounds."

Source: https://www.nbcnews.com/business/economy/federal-reserve-interest-rate-decision-rcna240337

Wall Street VS. Main Street: America's Split Economy

While consumer confidence fell again in October, slipping to 94.6 from 95.6 the month before, the stock market seems to be telling a completely different story. On Monday, all four major U.S. stock indexes, the Dow Jones, S&P 500, Nasdaq, and Russell 2000, hit record highs on the same day, something that rarely happens. Investors are feeling upbeat thanks to strong corporate earnings, expectations for another Federal Reserve interest rate cut, and hopes that trade talks between the U.S. and China will go smoothly. It’s the kind of mix that fuels optimism. There's cheaper borrowing, solid profits, and calmer headlines.

But every day, Americans aren’t feeling the same excitement. Survey results show that people are growing more worried about their future income and job stability, and prices for gas and groceries remain high. Inflation may have slowed a bit, but it’s still eating into paychecks. Many households feel like the stock market boom benefits investors, not average families. In that sense, Wall Street’s celebration doesn’t match Main Street’s reality.

The gap between these two views of the economy may come down to timing. Investors focus on the future, while consumers are reacting to what’s happening right now. If lower interest rates and business optimism start boosting wages and jobs, confidence might catch up. But if prices stay high and layoffs continue, the divide could grow even wider. For now, it’s a tale of two economies, one soaring in the markets, the other still trying to find its footing.

https://www.msn.com/en-us/money/markets/all-four-u-s-stock-market-indexes-just-closed-at-record-highs-here-s-what-history-says-happens-next/ar-AA1PkX2n?ocid=BingNewsVerp

https://apnews.com/article/consumer-confidence-conference-board-economy-spending-d406ec7cdf046a4c365a72672fdfbb8d

Inflation rate hit 3.0% in September, lower than expected, long-awaited CPI report shows

        Inflation did not rise to what economics have projected for the month of September, with the CPI increasing by only 3% and 3% annually, less than forecasted. The reason why the CPI is important right now is because it is the only economic data allowed to be released during the government shutdown. The data showed that their was moderate price increase in food and energy, while home costs and core services remained contained. A 4.1% jump in gasoline prices was a large contributor with the overall inflation being muted, after a couple months of volatility. Along with this data stock market futures added to gains following the release, while treasury yield were slightly negative. 

        This CPI report, provides a glimpse into the state of the U.S. economy at a time where other data is suspended. All this data provides the key piece of evidence guiding the feds next move of cutting rates. This has had people concern that the persist of Trump's tariffs could cause another round of painful inflation on our economy causing issues. Overall, the softer inflation right now supports the case for continued monetary easing to sustain economic momentum. 

https://www.cnbc.com/2025/10/24/cpi-inflation-september-2025.html

Grounded Against Flight: The Workers Strike Against Boeing

 This Sunday, workers at Boeing's St. Louis Defense Center rejected the company's latest contract offer, extending a 13-week strike that has slowed the production of fighter jets and other critical defense components. The International Association of Machinists and Aerospace Workers (IAM), representing around 3,200 employees, said Boeing's proposal failed to meet workers' needs and was nearly identical to one previously rejected. The union's approved counteroffer, voted on by the workers of the union, would add roughly $50 million over the next four years. Boeing's management has stated that it will not consider this offer. 

Meanwhile, Boeing CEO Kelly Ortberg will make around $22 million this year, a point many people look to as the company resists higher compensation for its workforce. With manufacturing delays mounting, historically bad stock performance, and neither side backing down, the coming weeks will be crucial for the company. 

Tariffs on Coffee and Consumer Substitutions

https://finance.yahoo.com/news/us-coffee-prices-spike-due-203207154.html

How much are you willing to pay for coffee? To what extent can business owners continue profiting on this non-essential good in spite of tariffs? Unfortunately, tariffs on Brazil, Colombia, Vietnam have contributed to an astonishing annual 19% increase in instant coffee since September 2024. According to the article, 99% of coffee is imported to the United States. Trump commented that some "unavailable natural resources” may be exempt from the tariffs, but coffee has not been brought to discussion. 

Many manufacturing companies that are relocating to the U.S. have the ability to produce, regardless of climate. The contrary can be said about coffee bean manufactures, as the plants only thrive in a naturally warm and humid environment. Therefore, the cafe business is not as agile. Consumer prices are rising, reflected in the most recent CPI release. The CPI lacks substitution data, which could be prevalent in this situation. Consumers may substitute with other sources of caffeine, like energy drinks. Consequently, inflation data derived from the CPI may underestimate real behavioral changes in consumer spending. 

Target’s Job Cuts and the Future of Corporate Work

Target recently announced plans to cut 1,800 corporate jobs, showing how even major companies are reorganizing to stay competitive. Incoming CEO Michael Fiddelke said the company had “too many layers and overlapping work,” which slowed decisions. Target claims the cuts aren’t about saving money but about improving efficiency. But it’ll be interesting to see if that’s really the case, especially given their profit declines over the past year. After a rough 2024, this move appears aimed at rebuilding confidence and positioning the company for a stronger future.

Still, these layoffs highlight a bigger trend in today’s economy. Companies want to appear “leaner” and more tech driven, but that often means fewer people doing more work. If this push toward automation keeps growing, it could reshape not only what corporate jobs look like but also how many exist in the years ahead.

Read the article here: https://www.nytimes.com/2025/10/23/business/target-job-cuts.html

Rare earths make gains amid battle to beat China’s dominance

Rare-earth minerals are gaining increased attention as the United States steps up efforts to reduce its dependence on China’s dominance in the market for these critical resources, which are essential for technologies like electric vehicles, semiconductors, and defense systems. China currently controls a major share of global production and reserves of rare earths, prompting U.S.-listed companies in the supply chain, such as MP Materials and USA Rare Earth, to see their shares rise amid expectations of increased investment and government support. Meanwhile, China has tightened export controls, requiring foreign firms to obtain government approval for products containing Chinese-origin rare earths, further spurring U.S. and allied nations to accelerate domestic and allied-based sourcing and refining capacity. The article highlights how this shift reflects broader strategic concerns about supply chain security and technological sovereignty.

https://www.cnbc.com/2025/10/20/rare-earths-gain-amid-us-effort-to-beat-chinas-dominance.html