UBS On-Air: Market Moves UBS On-Air: Paul Donovan Daily Audio 'Losing jobs'
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Oct 2, 2025 The ongoing US government shutdown stirs concern as President Trump hints at potential firings of federal workers. This could elevate unemployment fears, impacting consumer behavior and spending habits. Despite these challenges, the relatively small federal workforce means limited economic fallout. Meanwhile, uncertainties linger for businesses reliant on government interactions. In international news, the Argentine peso weakens, complicating US assistance amidst intricate trade ties with China.
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Firing Federal Workers Raises Fear Noticably
- Paul Donovan argues firing federal workers could raise fear of unemployment and change spending behaviour.
- He says the federal workforce is small so recession risk rises only modestly.
Fear Spreads Economic Effects Beyond Job Loss
- Donovan explains fear of unemployment broadens labour market weakness and increases precautionary saving.
- He notes parts of the economy tied to government interaction face added uncertainty and behavioural changes.
Court Ruling Isn't A Short-Term Policy Game-Changer
- An interim court ruling on Fed Governor Cook doesn't alter near-term Fed policy according to Donovan.
- He stresses structural concerns about political influence on monetary policy are longer-term issues.