The U.S. federal government is set to shut down at Midnight of Tuesday, following lawmakers’ inability to strike a deal on temporary funding. The impasse leaves essential departments and services facing temporary closure as Republicans and Democrats failed to bridge their sharp divisions over funding terms.
Negotiations stalled as Democrats continued to demand that any short-term funding extension include a prolongation of enhanced Affordable Care Act (ACA) tax credits, a move strongly opposed by Republican counterparts. The ACA credits, which provide lower health insurance premiums for millions who purchase coverage through government exchanges, are currently scheduled to expire at the end of 2025.
Political leaders from both parties have begun publicly assigning blame for the impending shutdown, appearing on news networks early Wednesday to make their cases to the American public.
President Donald Trump, addressing reporters on Tuesday, cautioned Democrats that a government funding lapse would permit his administration to carry out “irreversible” measures, including closures to programs that Democrats prioritize.
In anticipation of the shutdown, both the U.S. Labor and Commerce Departments announced their statistical agencies would suspend the release of economic data. Of particular concern to investors is the postponement of Friday’s closely watched nonfarm payrolls report, a key indicator for assessing the likelihood of a Federal Reserve interest rate cut later this month.
Financial markets reacted to the uncertainty, with the U.S. dollar weakening to a one-week low against major currencies. The dollar index slipped to 97.633 overnight—its lowest level since the previous Wednesday—as investors weighed the consequences of delayed economic data.
