Grounded Paychecks: 60,000 Air Safety Workers Tighten Belts As US Shutdown Drags On

Economic

Summary:

Workers face financial strain, may resort to side jobs.Shutdown impacts TSA and air-traffic controllers.Political standoff affects federal employees' pay.

The 60,000 men and women responsible for keeping American skies safe have gone unpaid throughout the government shutdown. Without a funding agreement soon, many will be forced to dip into savings, rack up credit-card debt, or take on part-time jobs to make ends meet, several federal employees said.

The shutdown is now three weeks old, and rapidly approaching the time when the tens of thousands of government employees who keep security lines moving and air traffic safe will miss a full paycheck. Those workers last received paychecks in mid-October, and those checks were missing up to two days' worth of pay.

"People are saying, 'Well, when I get off work, I'm going to do Uber or DoorDash or Lyft or something like that because I need to put food on the table and I got a kid at home'," said Neal Gosman, treasurer of the American Federation of Government Employees Local 899 in Minnesota, a union representing Transportation Security Administration workers.

Gosman, who also works part time as a transportation security officer in addition to his union duties, said he received about 60% of his normal TSA pay in the last paycheck but that a co-worker received only $6.34.

National Air Traffic Controllers Association President Nick Daniels said on Monday that controllers are going to get a pay stub on Thursday that shows no pay for next week, and many will face very hard choices.

"How do I deal with calling my employer and telling them I can't afford child care? I have my two kids with me. What do you want me to do?" Daniels said of controllers struggling to make ends meet without paychecks.

The authority that operates the Minneapolis-St. Paul International Airport plans to set up a shelf to provide nonperishable food items to federal employees as it did during the 2018-19 government shutdown, according to spokesperson John Welbes. If the shutdown stretches into November, the authority is considering offering boxed lunches.

But that will not be enough. A TSA officer at Dallas-Fort Worth Airport, who asked to be identified only as M., said he will take out a $3,000 loan to help cover his expenses.

"The loan will be for car payments and to pay for the new apartment because I can no longer afford the current one because of everything that's going on," said M., who did not want his full name used due to concerns about being fired for speaking out.

In 2019, during a 35-day shutdown, the number of absences by air-traffic controllers and TSA officers rose as workers missed paychecks, which added to passenger wait times at airport checkpoints. Authorities were forced to slow air traffic in New York, which pressured lawmakers to quickly end the standoff.

On Day 31 of that shutdown, 10% of TSA workers called in sick - triple the normal absence rate.

Last week, the U.S. Transportation Department shared information on how to make donations of food, clothing or other items to the more than 50,000 TSA officers across the country, who earn an average of $40,000 per year. The guidelines said that gifts of donuts, pizza and coffee are fine, but not cash, and that people should never donate at a checkpoint.

U.S. PresidentDonald Trump's fellow Republicans hold majorities in both chambers of Congress but need at least seven Democratic votes to pass a funding bill in the Senate. Democrats are holding out for continuing and expanding healthcare subsidies for people who buy insurance through the Affordable Care Act. Another vote to pass a government spending bill is expected on Thursday.

"I'm more just disappointed that there's no true negotiations going on," said another TSA officer in Dayton, Ohio, adding that he does not understand why Congress is playing "political chess" with his paycheck.

Source: TradingView

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Samantha Luan

Forex

Political

Economic

Key points:

● Trump said ballroom wouldn't touch White House building

● White House, Capitol, Supreme Court exempt from usual review

● Trump says he and donors will cover the cost

The White House said on Tuesday it will submit plans for President Donald Trump's $250 million White House ballroom project to a body that oversees federal building construction, even though demolition work began earlier this week.Trumpreveled on Tuesday in the demolition sounds by construction workers for the ballroom addition to the White House, the first major change to the historic property in decades.But critics, aghast about images of the White House walls crumbling after Trump had pledged the project would not interfere with the existing landmark, said a review process should have taken place before the work began.

The White House still intends to submit those plans to the National Capital Planning Commission, which oversees federal construction in Washington and neighboring states, a White House official told Reuters."Construction plans have not yet been submitted to the National Capital Planning Commission but will be soon," the official said, adding that the NCPC does not have jurisdiction over demolition work.Asked why the demolition of East Wing walls was occurring despite Trump's promise that it would not affect the existing building, the official said modernization work was required in the East Wing and changes had always been a possibility.

"The scope and size was always subject to vary as the project developed," he said.Trump, a former New York real estate magnate who has made changes to the Oval Office, Rose Garden and other parts of the executive mansion complex since taking office in January, has long wanted to build a ballroom to host larger gatherings. Trump has said it will be paid for by himself and donors, allowing him to avoid seeking congressionally appropriated government funds but raising questions about possible conflicts of interest.Bryan Green, who served as an NCPC commissioner under Democratic President Joe Biden, said demolition work was connected to the ballroom project.

"Demolition really cannot be separated from the new construction that follows," he said. "These are linked."A tennis pavilion on White House grounds completed during Trump's first term went through a review process with the NCPC and the U.S. Commission of Fine Arts, Green noted.Doing the same kind of review this time would have avoided the shock that many observers felt this week when the demolition began unannounced on Monday. Trump later said ground had been broken on the project after images of the demolition started circulating in news reports.

"You don't have the image of a wrecking ball hitting the president's house, one of the most important buildings in our country, by surprise to everyone except a small handful of people," Green said.Trump's White House dismissed criticism, calling it "manufactured outrage." It pointed to additions and renovations that have been made to the executive mansion and its grounds by presidents from Theodore Roosevelt to Bill Clinton.

'IT REMINDS ME OF MONEY'

Loud banging from the East Wing demolition caught the attention of tourists walking past the south lawn of the White House on Tuesday, causing several people to stop briefly to see demolition excavators tearing down the roof.“I think it’s a total waste of money and shows a complete lack of respect for historic buildings in our nation's capital, but it’s totally not surprising. I am having PTSD from my bathroom remodel,” said Catheryn Koss, 52, from California. "I thought they said they were going to preserve it.”

Several prominent Democrats also voiced disapproval.

“It’s not his house. It’s your house. And he’s destroying it,” former first lady and Democratic presidential nominee Hillary Clinton said on X.There has been some ambiguity about which entities have jurisdiction over the project.Priya Jain, who chairs a heritage conservation committee at the Society of Architectural Historians, which has expressed concern about the work, said the National Historic Preservation Act of 1966 normally requires reviews for projects that affect historic buildings.

But a carve-out for the White House, the U.S. Capitol and the Supreme Court and their grounds meant Trump's project was exempt."We have best practices (on) how to do this, and it would have been nice to see some of that process, even if it was not required by law," she said.The U.S. Treasury, which sits adjacent to the White House, confirmed that it directed its employees not to share pictures of the construction site."Carelessly shared photographs of the White House complex during this process could potentially reveal sensitive items, including security features or confidential structural details," a spokesperson said.

The White House's East Wing sits on top of the Presidential Emergency Operations Center, a bunker the president would use in a wartime scenario. It is unclear how the facility is being impacted.Speaking to Republican lawmakers gathered in the White House Rose Garden on Tuesday, Trump noted the noises of demolition work coming from the other side of the grounds."You probably hear the beautiful sound of construction to the back," he said, sighing approvingly. "That's music to my ears. I love that sound. Other people don't like it. ... When I hear that sound it reminds me of money."

Source: TradingView

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Golden Gleam

Economic

Commodity

Gold prices fell on Wednesday to a near two-week low, following their sharpest single-day drop in five years in the previous session, as investors booked profits ahead of key U.S. inflation data due this week.

Spot gold was down 1.7% at $4,054.69 per ounce, as of 09:22 a.m. ET (1322 GMT), after rising to as much as $4,161.17 earlier in the session. U.S. gold futures for December delivery fell 0.9% to $4,072.10 per ounce.The U.S. dollar index (.DXY), rose 0.2% to a one-week high, making dollar-priced bullion more expensive.

Gold prices have notched multiple record highs and gained 54% this year, bolstered by geopolitical tensions, economic uncertainty, expectations of U.S. rate cuts and strong inflows into ETFs. Prices fell 5.3% on Tuesday, after notching a record high of $4,381.21 in the preceding session.

"Given the aggressive move to the upside over the course of the last several weeks, it's not completely surprising to us to see a bit of profit taking ahead of the CPI report on Friday," said David Meger, director of metals trading at High Ridge Futures.

On the technical front, gold is supported by the 21-day moving average at $4,005.Friday's U.S. Consumer Price Index (CPI) report, delayed due to the ongoing U.S. government shutdown, is expected to show that core inflation held at 3.1% in September.

Investors have nearly fully priced in a 25-basis-point rate cut at the U.S. Federal Reserve's meeting next week.

Gold, a non-yielding asset, tends to benefit in low-interest rate environments.

Meanwhile, Russia said on Wednesday that it was still preparing for a potential summit between President Vladimir Putin and U.S. President Donald Trump.

Investors are also awaiting clarity on next week's potential meeting between Trump and Chinese President Xi Jinping.

"We maintain a bullish outlook for gold and silver into 2026, and following a much-needed correction/consolidation, traders will likely pause for thought before concluding the developments that drove the historic rallies this year has not gone away," said Ole Hansen, head of commodity strategy at Saxo Bank, in a note.

Among other metals, spot silver dropped 1% to $48.27 per ounce. It slipped 7.1% on Tuesday.

Platinum fell 0.1% to $1,549.85, and palladium was down 1.6% at $1,430.

Reporting by Noel John and Pablo Sinha in Bengaluru, additional reporting by Kavya Balaraman; Editing by Sahal Muhammed

Source: Kitco

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Adam

Economic

Central Bank

The European Central Bank has finished cutting interest rates as inflation holds around its 2% target and the economy marches steadily on, according to a growing majority of economists in a Reuters poll.

While inflation picked up slightly to 2.2% last month from 2.0% in August, accounts of the ECB's September 10-11 meeting stated its policy was "sufficiently robust" to manage any inflation shocks.

The central bank kept rates on hold last month and offered a modestly upbeat assessment of the bloc's economy.

NO CHANGE EXPECTED ON OCTOBER 30

The ECB, which cut the deposit rate by 200 basis points between June 2024 and June 2025, will keep it unchanged at 2.00% on October 30 for a third straight meeting, all 88 economists in the October 15-22 Reuters poll said.

Nearly 72%, 63 of 88, said the ECB would hold its deposit rate this year, while 57% - 45 of 79 - saw no change by the end of next year.

Last month, slightly less than half expected rates to be unchanged at end-2026. Rate futures are narrowly pricing a 25 basis point cut by end-2026.

"A lack of softening in recent (economic) activity and inflation data closes the window for an additional ECB 'insurance cut'. We are dropping what would have been the last cut from our forecast and now foresee the policy rate staying at 2.00% until the end of 2026," said Shaan Raithatha, senior economist at Vanguard.

That contrasts with expectations for two more rate cuts from the U.S. Federal Reserve this year, where a weakening labour market is taking precedence over rising inflation risks, partly stoked by tariffs, a separate Reuters survey showed.

The euro zone is handling U.S. trade barriers better than previously expected, leaving inflation risks "quite contained", ECB President Christine Lagarde said on September 30.

Inflation will average around 2% each year through 2027, poll medians showed, largely unchanged from last month.

STABLE GROWTH OUTLOOK

The growth outlook also remained stable amid hopes of fiscal spending, particularly from Germany - the bloc's biggest economy. The euro zone economy will expand 1.2%, 1.1% and 1.4% this year, next year and in 2027, respectively, the poll predicted.

But that stable outlook has downside risks. A majority of economists - 24 of 30 - who responded to a separate question said the euro zone economy was more likely to grow slower than they expect over the coming year than faster.

"Euro zone resilience is what is driving the steady outlook ... But the risk is still clearly to the downside both in terms of growth and inflation," said Carsten Brzeski, global head of macro at ING.

"Political instability is very likely to bring down French growth. In Germany, we're now seeing growth optimism is being hit and it could very well be it takes longer than expected before the stimulus story shows up."

Germany's economy is forecast to grow a mere 0.2% this year and 1.1% in 2026, largely unchanged from July's forecasts, despite optimism around infrastructure spending plans. Growth in France will be 0.6% this year and 0.9% in 2026, the poll predicted.

Source: reuters

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Adam

Economic

Is the US financial plumbing system under severe stress?

Last week, several pundits and financial media were all over the potential stress brewing in the US financial plumbing system.

Specifically, SOFR fixings have been several basis points above Fed Funds, which could indicate that repo markets are under stress as collateralized repo transactions (e.g,. SOFR) command an increasingly higher yield over pure proxies of risk-free rate (e.g., Fed Funds).

Before I give you my perspective, let’s recap: why would such pressure be building in the first place?

QT has operated in the background for a while, the RRP facility has been drained to virtually 0, and the TGA has been replenished: this trio of plumbing operations has led to bank reserves flirting with the 3 trillion level.

$3 trillion of reserves is an important level because it’s ~10% of US nominal GDP as per Q2. In a recent speech, Waller indicated 10% as the first threshold to define a regime of ‘’scarce reserves’’.

Reserves are money for banks – they are used to settle interbank transactions.

If reserves are scarce, banks will find it harder to oil the underlying mechanism supporting the base of the pyramid of financial markets: the US repo market.

The chart below shows how US bank reserves now represent 11% of US nominal GDP, close to the ’’Waller threshold’’.

Are US Bank Reserves Becoming Too Scarce?_1

But does that mean the financial plumbing system is under stress?

Not really.

One of the easiest ways to track plumbing stress is to look at the difference between 3-month ahead SOFR rates (proxy for US repo rate) and 3-month ahead Fed Funds rate (pure risk-free) - the SOFR/Fed Fund spread investors are expecting for the near future.

The spread sits at 8 bps today, hardly signaling any real underlying stress in the plumbing of financial markets.

And another barometer for US financial plumbing stress - swap spreads - is also behaving very well.

Powell also basically telegraphed the end of QT this week, so this is a risk the Fed is actively managing.

Source: investing

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Warren Takunda

Economic

Has UK inflation peaked? The latest official figures showing price growth in the UK stayed at 3.8% in September seem to suggest so.

The statement cannot be made with absolute certainty yet but many economists reacted to the latest consumer prices index (CPI) data with a message that the only direction for inflation over the rest of the year was down.

City economists had expected the Office for National Statistics to report an increase from August’s 3.8% to 4%, and they were in good company – the Bank of England also said inflation would top out at that level last month.

Food retailers had other ideas. They slowed the recent escalation in the cost of essential items, helping to ease the pressure on household budgets.

Signs of Peak Inflation Open Door to Earlier Bank of England Interest Rate Cuts_1

Having focused on food inflation in recent months, central bank policymakers will find themselves under pressure to bring forward interest rate cuts that investors believed were unlikely before next spring.

A major rethink could lead to a reduction in the cost of borrowing as early as the Bank’s monetary policy committee meetings in November or December.

However, the consultancy Capital Economics said it expected only a modest adjustment to the Bank’s timetable, bringing the decision forward from March to February.

Other economists said a more dramatic shift was possible after clear signs of the economy slowing before next month’s budget.

Martin Beck, at the consultancy WPI Strategy, said: “A November move looks off the table, but markets may be overestimating how long the Bank will wait.”

He expects CPI inflation to continue falling back towards the 2% target in the first half of next year as the effect of tax and regulated price increases earlier this year drop out of the annual calculation.

Adam Deasy, an economist at the accountancy firm PwC, said the Bank would “perhaps want clearer signs that this is indeed the peak before moving further on rate cuts”.

He added that while signs of CPI topping out were good news, it “still sits at nearly double the Bank of England’s 2% target, and the UK remains an outlier among major economies; the next highest in the G7 is the US at 2.9%”.

Several Bank policymakers have also pointed out that services inflation remains high. The recent figures proved the point, showing this major element of the inflation basket remaining stuck at 4.7%.

Food inflation might have slowed but groceries are still 4.5% more expensive on the year.

Rebecca Florisson, the principal analyst at the Work Foundation at Lancaster University, said the rising cost of essentials was “particularly bad news for low-income households”.

Using survey evidence from more than 3,600 people, she said a combination of wage stagnation and the cost of living crisis meant only 42% of low-paid workers said their pay was keeping up with costs – compared with 73% of higher-paid workers.

Rachel Reeves will want to alleviate this situation in the budget and is due to chair a meeting of cabinet colleagues on Thursday to ask what each department can do to tame inflation. Treasury officials are understood to be considering a cut in VAT on energy costs from 5% to zero.

If that happens, it could knock 0.2 percentage points off CPI. That must make the Bank think again about a rate cute in 2025.

Source: Theguardian

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Damon

Central Bank

Analysts at BofA Global Research expect the Bank of Canada (BoC) to maintain its key policy rate at 2.50% during the upcoming October 29 meeting, delaying rate cuts until December. Their view hinges on residual strength in Canada's labor market and persistently elevated core inflation, both of which are viewed as significant headwinds to immediate easing.

In their latest note, Carlos Capistran and colleagues emphasize, "We expect the BoC to keep its policy rate unchanged at 2.50% on October 29." The report points to sticky core inflation measures, averaging 3.15% in September, and a robust rebound in employment, noting a +60.4k net job gain last month, as justifications for the central bank holding policy steady.

Economic growth in Canada remains subdued, although July brought a modest reprieve with a 0.2% month-over-month GDP expansion. This was buoyed by gains in extractive and manufacturing industries; however, weak retail trade and tepid consumer spending continue to restrain momentum, casting doubt on the resilience of the recovery.

Headline inflation rose to 2.4% in September from 1.9% in August, with core measures edging up as well, driven primarily by fading disinflation in gasoline prices. "Rising inflation limits the BoC's room to cut the policy rate in October," the BofA team cautioned, adding that inflation persistence keeps the central bank in a cautious stance, despite broader weakness in economic activity.

The BoC is expected to maintain its meeting-by-meeting flexibility, but forward guidance will likely tilt dovish should inflation begin to ease. Capistran and his co-authors see the central bank delivering two 25bp cuts, one each in December and January, bringing the policy rate down to 2.00% by early next year.

In rate markets, the CAD curve is seen "pricing out cuts—but not enough," suggesting scope for front-end rates to decline further as policy easing resumes. Similarly, BofA's FX strategists argue the risk/reward now favors positioning for a lower USD/CAD, especially given low implied volatility and recent USD strength priced into the currency pair.

Market expectations for a surprise rate cut in October still remain elevated, with implied odds around 70%. However, BofA views this as overly aggressive, stating the market "reflects a BoC that is more in a hurry than it may need to be," signaling greater scope for disappointment if the central bank ultimately opts for patience.