Government closure could cause unprecedented federal job losses on a national scale
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The closings of the past government were more political theater than the economic shock, the markets and the jobs rebound quickly.
This time, however, the president Donald TrumpWarning that some workers on leave may not resume their work increases the issues, transforming a routine disturbance into a threat to an already fragile labor market.
If Trump performs this threat, he would almost certainly be confronted with an immediate challenge to the court. But if it is able, a generally rejected closure as a partisan rupture rather than a financial disturbance could give lasting economic consequences.
Shutdown explained: who works, who does not do and how much it costs
Robert Conzo, CEO and CEO of the Wealth Alliance, a financial consulting firm, said that such a decision would mark an unexplored territory.
“If the American federal government rejects workers instead of competing them, I think the labor market can see a shock with a higher unemployment rate and initial unemployment claims,” said Conzo to Fox News Digital.
The American Capitol in Washington, DC, Wednesday June 25, 2025. (Eric Lee / Bloomberg / Getty Images)
“The big question for me is whether Trump uses this as a reigning negotiation tactic or a turning point towards federal expenses lower than the future. I think that the use of a government closure to reject federal workers would be unprecedented and risks a myriad of questions.
The government is expected to close at 12:01 p.m. Wednesday if Congress fails to approve an extension of funding. A closure forces federal agencies to send workers at home in roles that are not considered essential. These contents are temporary; Once the congress has resolved the dead end, the employees are brought back and receive a salary.
Each week, a closure reduces approximately 0.2% of American economic growth, although this loss is generally recovered once the federal workers return and the agencies reopped.
The job market is already on fragile land. The Washington, DC, which houses a large share of federal workers, was particularly affected after the Elon Musk Government Department of Effectiveness (DOGE) Board Advisory Board Pressing the layoffs earlier this year.
When they were asked how many federal workers could be dismissed, Trump told journalists at the White House on Tuesday: “We can do a lot”, putting blame on Democrats for the dead end.
President Donald Trump speaks to media members on the southern lawn of the White House before boarding Marine One in Washington on Tuesday, September 30, 2025. (Francis Chung / Politico / Bloomberg / Getty Images)
The Trump administration is preparing to supervise which could be the greatest mass resignation in the history of the United States, with more than 100,000 federal employees who should go within the framework of its delayed resignation program.
At the same time, federal agencies have written plans to sweep the layoffs if the legislators fail to conclude an agreement, increasing the participations for a workforce that is already preparing for upheavals.
And the timing could not be worse: these workers enter a labor market that has lost momentum, with unemployment Passed at 4.3% in August – the highest since 2021.
The low August report came in the heels of another gentle reading in July, which prompted Trump to dismiss the commissioner of the Bureau of Labor Statistics (BLS) Erika MCENTARFER. Its withdrawal occurred a few hours after the agency has published new data showing that employment growth had been considerably overestimated. The office revised its May and June figures down 258,000 jobs, marking an unusual correction that has aroused strong Trump criticism.
The revision of 911K jobs in the White House, the largest ever recorded, requires a drop in Fed rate
The latest BLS revisions are now suggesting previous overestimated reports of more than 900,000 jobs. The adjustment, the largest correction recorded and at the upper end of Wall Street forecasts, comes as Trump intensifies the pressure on the Federal reserve To reduce interest rates to support growth.
The president of the Federal Reserve, Jerome Powell, speaks to journalists following regular meetings of the Federal Committee of the market open to the Fed on July 30, 2025 in Washington. (SOMODEVILLA / GETTY Images)
In this context, the threat of government judgment is looming. Analysts warn that the button on federal workers could add another layer of tension to a labor market which already showed cracks.
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Brian Mulberry, principal director of the client portfolio at Zacks Investment Management, told Fox News Digital, up to 100,000 jobs could be at risk if a closure occurred, with workers in the Washington region.
However, he noted that the wider economic effect can be suffocated:
“The loss of 100,000 federal workers would increase the unemployment rate above? The answer is no,” said Mulberry, saying that it would only add 0.06 percentage points if the hiring of the private sector does not compensate for losses.
