I do a calculation factoring in all of the deferred layoffs effective October 1.
The BEA’s GDP Report for 2025 Q4 dramatically missed estimates of 3.0 percent by GDPNow and 2.8 percent by Bloomberg Econoday.
Percentage Point Contributions to GDP Detail
- PCE Services: 1.59 PP
- PCE Goods: -0.01 PP
- Government: -0.90 PP
- Residential Investment: -0.06 PP
- Nonresidential Investment: 0.51 PP
- CIPI: 0.21 PP
- Exports: -0.01 PP
- Imports 0.18 PP
PCE stands for Personal Consumption Expenditures.
CIPI stands for Change in Private Inventory.
Imports neither add nor subtract from GDP by definition (D meaning domestic). However, the BEA assumes all sales are domestic so it adjusts by the dollar amount of imports.
I wish the BEA would point this out, but Imports do not subtract from GDP. They have no impact at all.
Government Contribution in Percentage Points
- Total: -0.90
- Federal Total: -1.15
- National Defense: -0.42
- Federal Non-Defense: -0.72
- State and Local: 0.25
The government contribution to fourth-quarter GDP was -0.90 percentage points.
Government Contribution in Dollars
- Total: -52.4
- Federal Total: -67.6
- National Defense: -25.0
- Federal Non-Defense: -42.6
- State and Local Consumption: 14.6
Trump Statement
Truth Social Link: The Democrat Shutdown cost the U.S.A. at least two points in GDP. That’s why they are doing it, in mini form, again. No Shutdowns! Also, LOWER INTEREST RATES. “Two Late” Powell is the WORST!!! President DJT
BEA Statement
Due to a lapse in appropriations, some federal government agencies were closed, and some employees were furloughed from October 1 through November 12. The full effects of the partial federal government shutdown on the fourth-quarter estimates cannot be quantified because they are embedded in the regular source data that underlie the estimates and cannot be separately identified. However, BEA did estimate the effects of a reduction in the labor services supplied by federal employees. BEA estimates that this reduction in services provided by the federal government subtracted about 1.0 percentage point from real GDP growth in the fourth quarter. Because furloughed federal employees received back pay, the shutdown had no impact on current-dollar federal compensation and was reflected as a temporary increase in the prices paid for federal employee compensation. For more information, an FAQ is available on BEA’s website.
Key Monthly Employment Levels (Thousands, Seasonally Adjusted)
- September 2025: 2,914
- October 2025: 2,748
- November 2025: 2,733
- December 2025: 2,720
- Cumulative Q4 (Sep to Dec): 194,000 net drop.
- January 2026: 2,686 (for context, continued decline)
September-to-October drop: 2,914 – 2,748 = 166,000 fewer federal employees on payroll. This is massive—about a 5.7% single-month plunge, the largest monthly decline in the series’ history (dating back to 1939).
Estimating the Paycheck Decline (Government-Wide)
With benefits, assuming an annual cost $160,000 (per Peter G. Peterson Foundation) is ~$2.59 billion/month or ~7.8 billion for the quarter.
That 7.8 billion is a permanent loss, which some would consider a good thing.
Without that employment loss, the Government GDP contribution would have been ~7.8 billion higher, -44.6.
We can now do a calculation factoring out the drop in employment.
-1.15 / -52.4 = X / -44.6
X = -0.98 confirming the BEA math.
BEA Layoff FAQ
When there is a lapse in appropriations, some federal government agencies are closed and some employees are furloughed. For the most part, the effects of a federal government shutdown on components of GDP and the national income and product accounts (NIPAs), such as personal consumption expenditures or private wages and salaries, cannot be quantified because they are embedded in the regular source data that underlie the estimates and cannot be separately identified.
However, one component of GDP for which the effects can be estimated is real federal government consumption expenditures, specifically, real federal government compensation. Conceptually, real compensation measures labor input, such as hours worked by federal employees. The estimate of real compensation is based primarily on employment data from the Bureau of Labor Statistics (BLS). During a government shutdown, federal workers are counted as “employed” in the BLS data if they eventually receive backpay, so these data would not reflect the reduction in services provided by the federal workforce. To account for the reduction in services, BEA adjusts real compensation based on an estimate of the reduction in hours worked, reflecting the number of employees furloughed and the number of furlough days.
After shutdowns, furloughed workers receive back pay. As a result, shutdowns have no impact on current-dollar federal compensation. In the NIPAs, compensation of government employees is measured on an accrual basis (when the compensation is earned); therefore, the timing of when the back pay was actually paid out does not affect the estimates.
Because there is a decrease in real federal government compensation without a corresponding decrease in current-dollar compensation, there is a temporary increase in the implied prices paid for federal government compensation, which BEA measures as the ratio between current-dollar compensation and real compensation. This is to say, the effect of a furlough on BEA’s estimates is to reduce the level of government services provided while maintaining the same cost of those services.
People were paid for work they did not perform.Think of all the reports out on hold and surveys not taken. It’s not like that work will ever be performed.
This is very much unlike a hurricane that disrupts spending then there is a boom of restoration.
If there were government contracts that were postponed until 2026, then that will turn up in the first quarter of 2026. If no contracts were delayed until 2026, I don’t believe there will be a 2026 influence from the shutdown.
My expectation, admittedly without understanding potential BEA nuances, is the -0.90 fourth-quarter result is one time, with little or no influence in 2026.
Economy Booming Because of Tariffs
7 Percent GDP Growth
Why Not 20 or 25 Percent GDP Growth?
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Trump blames the government shutdown and Powell for the slowdown.
Every shutdown, every tariff and subsequent taco on it or SCOTUS tariff rejection erodes confidence in the US and its leadership. That reverberates into the financial markets.
Only the prepared will thrive financially in this market.
Sell calls or buy puts on rallies and do the opposite on corrections. The only thing Trump has been good for so far is volatility so that’s how I’m gonna profit.
For every clown in office, there is a way to profit.
Absolutely true. These clowns are creating more opportunities than most!
Silver up 6%….amazing.
OT and talking my book!
Just sold a fat stack of options on AEM, PAAS and HL that had appreciated wildly after grabbing them during the take down last week (trade them regularly). It’s hard and somewhat stressful work, but it is damn rewarding!
Fun during the winter when the farm is pretty dormant…
The silver lining to IRAN and all the craziness out of Washington is investing in precious metals and their producers. MAGA faithful have long been stackers thinking that evil democrats would destroy the value of the dollar. Now they are witnessing their beloved right wing crush our dollar and magnify the debt. Either way? They win if they have lots of gold!
The Left has always been tax and spend, building debt as fast as the right. With better returns and less death. Americans do not seem to care as long as they think they are on the side that is “winning”. So now the left has a great deal of catching up if they see the currency being debased.
Any outsider or objective observer can see a corrupt and complicit DOJ, congress and media that is protecting a criminal pederast and a congress inflating debt and the money supply dramatically.
If war and debt are always the action? Gold or silver mining stocks and some physical metal is always the answer.
Both have eclipsed the DOW and S&P 500 with minimal risk and a few dividends if you own the best of the mining stocks.
Both sides of the political spectrum and those of us caught in the middle need protection from both sides of the government.
Favorite tickers:
AEM gold major since $46
VGZ Junior gold since .08 .
CNL Junior gold since $6.80
HL, AG, PAAS ~ silver. Lots of entries and exits. Ride em like a wild pony!
Trump is following the 2025 playbook closely and that means destroying the dollar and causing a currency re-set. Even if he fails the dollar is getting debased at a staggering rate!
MIsh may want to follow up on this in the future. He is the one that gave me considerable education on the topic back when I was a lad during the housing crisis.
“Just sold a fat stack of options”
Now you’re talking! You’re such a big boy now. I am so proud.
I am selling put credit spreads on XLE and XOP myself. The money keeps rolling in….
I sold the options today because silver failed to decisively break $87 on a technical signal. Gold has a big short position that is having trouble clearing before first notice on the 27th. Goodness these markets are fun!
Only when winning!
😉
A few thousand a day keeps the doctors (and poverty) away!
Like healthy food and exercise!
Options trading right now has been wild. Happy to pay the taxes!
taxes? no need for those if one sets up life properly. also, it’s not the price of the gold that matters. ti’s the number of ounces one owns and in possession of. but i’m also a trader so love playing around too. a silver coin is a lunch or dinner each and every century. a gold coin buys the same food, clothing, shelter, too. i love the r/e chart priced in gold. also the dow/gold ratio. it trades around a certain range over the decades and centuries. so one can sell one’s silver and gold and buy property and equities with the fun pile of money coins……………no taxes, necessary. in reality of humans selling gold and silver for goods………..including houses.
Taxes on short term cap gains are simply not avoidable.
As for physical gold and silver? I have very little experience there. I have a hard time getting my head around anything that is not taxed…
ok. just a fact of life that men for centuries never paid taxes on silver and gold appreciating…………same with art work, too. no 1099s. when a man buys a meal or a house with silver coins on the planet, i would doubt even 1% of them would pay cap gains. plus so many businessmen set up their lives to avoid all taxation, through legal means the world over.
Right. Give your coins to your heir before you pass. Or tell them where they’re buried.
Taxes? I benefit in many ways from state and local governments. local police are there for me when there are criminals or accidents. Our roads are fantastic and the power grid is reliable. My children have been treated well in public schools and quite frankly I’m one of those men that feels my taxes are mostly fair.
What the Federal government does is quite a different story. All of this deficit spending on military abuse is insane!
Especially when the money could be spent in infrastructure, education and technological research/development.
“Both have eclipsed the DOW and S&P 500 with minimal risk…”
Last silver high (before now) was around $43 in 2011 and declined by 62% to $16 in 4 years, and stayed there for 5 more years. And the recent silver price increase makes that earlier period of highs (and lows) look like a speed bump.
Glad you’re making money, but silver did not eclipse S&P 500 over these 9 years and was certainly not minimal risk. Are you sure you don’t work for Trump’s press machine? LOL
Love your sense of humor (some of the time).
All of us can cherry pick numbers including me — and I am in and out of the PM options like one of Trumps rented pussies because that is the way it works. Entering the stocks themselves in size three years ago and holding them for this long cycle move based on insane debt levels and selling weekly covered calls on upward spikes is a great high probability game. Not for the undercapitalized or those with heart problems!
Enjoy!
good take.
I can’t imagine the “shutdown” affected GDP much. Not very much was “shut down” – at least that I can remember. I guess some people got paid late, but it’s not like not having cash meant they stopped spending. This is America, after all.
How can we rely on any government numbers or reports anymore? We all know heads roll if the emperor doesn’t like the numbers. Does anyone really believe that horrible numbers will be released without ‘correction’?
But the chocolate ration is now a cocoa-free plant-based alternative.
The future looks double plus good!
cocoa is a plant
Exactly! Plant-based and cocoa free is like getting twice the chocolate!
But chocolate has milk as an ingredient, no?
Some do, some don’t.
It looks as if the war with Iran is about to happen soon and it will cause many problems!
This is not worth 1 American life many of our brothers and sisters will be killed and injured in an unnecessary war of choice.
There will be massive economic and environmental damages.
The price of gasoline and diesel will skyrocket.
The regime will domestically go after antiwar citizens
Many civilians will get killed and injured.
Why? So the oil companies the israeli regime and our military industrial complex get more wealth and power
Put me down as a US citizen against this dumb war
Support our troops bring them home now and alive
No blood for oil No more disposable heros
But the MIC needs to make more profit than last year. Last I checked, our soldiers are just a tool of the defense industry’s profit arm. What say you?
I say mind our own business we should bring our troops home from every overseas base
It’s not even blood for oil. It’s “Die to distract from the rampant pedophelia in your government”.
It actually makes me nauseous to think about.
Regarding the epstein regime class or administration I want grand jury indictments jury trials imprisonment and fines!! Also impeachments and removal from office!!
nice fiction. but i concur.
I will bet you that the perpetrators will b punished but not as fast as we would like
bully bully
heroes, too. but i never dispose of any well-prepared hero from my local deli.
A bunch of Iranian kids that did nothing but suffer under a theocracy will die too.
I am an opponent of the upcoming war with Iran and do not want Americans and Iranians to die I want peace!!
Iran like Iraq has a lot of oil but I also agree that we are in wsg the dog territory
It’s not going to be that bad. It’ll be a lot worse. We’re about to launch an unconstitutional undeclared war against a country that poses no risk to us and didn’t do anything to us, proving once again that the biggest state sponsor of terrorism is the US. Congress is sitting out the deliberation so that when it goes sideways, they can use that to remove Trump. That might be a desirable outcome, but at too great a cost in lives – and that’s without even considering how it could spin out of control if a carrier is sunk.
Replacing Trump with Vance is like changing your shirt to get rid of the stench of shitting in your pants…
Regarding congress sitting it out so they can remove trump later
That is very dumb and we may be entering economic collapse and possibly world war three
How long do you think it would take to actually get rid of Trump? As in from time Congress started to time he was physically removed from office after all court challenges?
Would you think that would take 6 months? A year? the rest of his term (2 years)? More importantly, who would be running the country during that time he fought it? It would be a shadow government of unelected people the same as what happened with Biden when he was mentally unfit in his final 2 years. Is that what we want?
Yes. It’s already a shadow government.
If republicans wanted to be done with Trump, it could move fast. Presumably Jared Kushner would remain in his role as de facto president until Trump climbs into the helicopter.
The Supreme Court has not ruled out all other means, but impeachment AND conviction would be the fastest way. Also impossible. Unless he dies or is assassinated, he will serve his full term. Trump is unfit for office, so we already have that.
an empty commander in chief office, would be fine for a few decades.
They’ll push the outrage button … “muh troops!”
If there’s any kind of nuclear chaos, you know Trump & his staff will leave the country, lol.