It’s no secret that Congress is still battling in budget negotiations. Consequently, prediction markets point to the risk of a government shutdown having jumped to about 70%. The shutdown will begin on Wednesday if legislators fail to come to an agreement on a budget. By late on Saturday, the odds of a shutdown were 50-50. The combination of recent events has raised alarm bells among federal agencies and markets.
Democrats have been pushing for extensions to Affordable Care Act (ACA) insurance subsidies to be included in the funding bill. They make the case that these short extensions are vital for the tens of millions of Americans that depend on these forms of support. GOP leaders argue that any talks about extending ACA subsidies should wait until after the government shutdown is avoided. This deepening partisan divide further underscores the difficulties of the ongoing negotiations and the need to come together, both for a fair compromise.
The latest action from the Trump administration is a dangerous one. They have directed federal agencies to plan for thousands of fired workers should Congress fail to make a deal. This directive indicates that the administration is beginning to treat the looming fiscal iceberg with all due seriousness. It underscores the risks at stake for our nation’s federal workforce.
The Labor Department poured on the confusion by declaring it would withhold its widely watched jobs report due on Friday. They expressed concern about the impact a government shutdown would have on the report’s quality and reliability. This decision has sent Wall Street into a tizzy, with investors watching signals of major job growth like hawks as a sign of potential economic slow down.
Our prediction markets are hopping like nobody’s business. Since the Labor Department’s announcement, Kalshi and Polymarket have seen a massive spike in wagers placed on an expected government shutdown. Market participants are becoming quite concerned that a government shutdown is becoming unavoidable. This uptick reflects their fear about where it is taking the economy and indispensable government operations.
President Donald Trump will be sitting down with the big four—House and Senate Majority Leaders and Minority Leaders on Monday. They hope to reach agreement on a package ahead of the fast approaching deadline. This meeting follows Trump’s sudden cancellation of a scheduled meeting with Democratic leadership last week, throwing negotiations into further disarray.