October 06, 2025 – Washington remained gridlocked over funding, as the government shutdown began on October 1st. While the standoff between the two political parties has disrupted key data releases, including the monthly Jobs Report from the Bureau of Labor Statistics (BLS), private-sector indicators continue to reveal stress points in the labor market. Investors and policymakers are watching whether the labor market will soften before growth can meaningfully accelerate again. Meanwhile, the economy continues to show its resilience amid an uncertain future. The U.S. consumers’ confidence, however, seems to be waning somewhat, as latest survey results suggest a decline in confidence last month.

U.S. government remains shutdown as standoff continues: The federal government went into shutdown on October 1, 2025, following Congress’s failure to agree on appropriations or a continuing resolution. As of October 6, the shutdown continues, and at least 600k federal employees are furloughed or placed on unpaid status, while others continue work under essential duty rules. Many agencies have suspended or limited operations, halting the release of several macroeconomic reports (including the latest BLS jobs report and CPI breakdowns). A White House memo from the Council of Economic Advisors (CEA) estimates that each week of shutdown could cost the U.S. economy roughly $15 billion in GDP, with spillovers into consumer spending, state programs, and regulatory delays. The reduction in government activity each week could shave off 0.1 percentage point from the annualized GDP growth, according to a JP Morgan analysis. If the shutdown continues for a month, consumer spending may decline by as much as $30 billion. Moreover, private businesses that rely on government activity or contracts will be hurt by the shutdown. The CEA estimates a potential 43k newly unemployed workers could result in a month-long shutdown scenario. The absence of full federal data also creates risk for markets and the Fed. Decision makers must rely more heavily on private indicators such as ADP for real‑time insights market until Washington finds its way out of its stalemate.

Jobs data shows signs of weakness in the labor market in September: With the absence of the BLS Jobs Report, eyes turned to payroll processor ADP’s private-sector jobs report. ADP uses data from 26 million workers whose employers use the payroll system, unlike the BLS report, which is a survey of all employers. Private-sector employment in September contracted by 32,000 jobs, according to ADP, after a sharp downward revision in August from an increase of 54,000 to a loss of 3,000 jobs. It is the third month of 2025 with a jobs decline. The ADP report, however, does not include government workers which limit its effectiveness in determining the course of the labor market. The recent monthly decline suggests weakening momentum across core industries, with layoffs appearing in manufacturing, financial services, and construction, which were partially offset by hirings in healthcare and IT. Education and health care also added 33,000 jobs, while leisure and hospitality lost 19,000. Smaller businesses are struggling compared to their larger counterparts, as businesses with less than 50 employees lost 40,000 jobs in September, while businesses with over 500 employees added 33,000. Wage growth for job holders continues to decelerate, consistent with easing labor pressures heading into the fourth quarter.

Mortgage applications dip weekly but remain above last year’s level: According to the Mortgage Bankers Association’s (MBA) Weekly Applications Survey ending September 26, 2025, mortgage application volume fell 12.7% on a seasonally adjusted basis from the week before. The Refinance (REFI) Index decreased by 21% from the previous week after climbing earlier in September, while the Purchase Index dropped 1% from the previous week. All sectors saw a decline, including conventional and VA mortgages. Still, the Refi Index reached its highest levels early in September after mortgage rates softened. The unadjusted purchase applications were up 16% compared to the same time last year as mortgage rates remain below levels observed in the first eight months of 2025. With the economy likely to slow and the job markets showing weaknesses, rates could decline gradually in the months ahead, which could help stimulate the housing market.

Labor market stagnation extended in August: The latest published Job Openings and Labor Turnover Survey (JOLTS) data released before the shutdown reached a hiring rate (monthly hires/total jobs) of 3.2%, a level similar to that of June 2024’s figure, which was the lowest rate since 2013. The low rate indicates employers are reluctant to bring in new hires right now. The quit rate came in at 1.9%, suggesting workers still feel some confidence, though that metric may continue to deteriorate if economic uncertainty deepens. Interestingly, layoffs remain subdued at a rate near 1.0%, consistent with a labor market that’s cooling gradually. In other words, job openings remain tight amidst muted churn in the labor market.

Decline in assessment of current economic conditions weighs on confidence: The U.S. Consumer Confidence Index declined by 3.6 points in September from August, reaching the lowest level since April, according to the Conference Board. Much of the decline was due to consumers’ belief that the labor market cooled further last month. Respondents who said jobs were “plentiful” dropped to 26.9% from 30.2% in August. One out of six (16.1%) expected more jobs to be available in six months, dropping from August’s 17.9%. The Present Situation Index, which looks at consumers’ views on current economic conditions, fell by 7.0 points to 125.4. The Expectations Index also declined by 1.3 points to 73.4, as more consumers were concerned about the labor market outlook and future business conditions in September. Meanwhile, consumers felt more optimistic about home buying as purchase plans for homes jumped to a 4-month high. The surge was likely due to the recent declines in rates in the past two months.

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