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Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own. Manage all your business finances, from banking to payments to credit cards, all in one place with their digital tools. Plus access online resources designed to help your business thrive. Learn more@chase.com business chase for business Make More of what's Yours the Chase Mobile app is available for select mobile devices. Message and data rates may apply JP Morgan Chase Bank Naomi Member FDIC Copyright 2025 JPMorgan Chase & Co. Bloomberg Audio Studios Podcasts Radio News.
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This is your weekly Washington Policy Pulse on the Balance of Power podcast. I'm Joe Matthew. Every Monday, Bloomberg Intelligence, senior policy analyst and friend of the show, Nathan Dean, shares his weekly call on upcoming catalysts in the nation's capital. Listen for the most and relevant policy research from our team at Bloomberg Intelligence. Now with today's installment, here's Nathan Dean.
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C
Okay, good morning and good afternoon everybody. Welcome again to the Washington Policy Pulse. My name is Nathan Dean. I'm a senior policy analyst with Bloomberg Intelligence here in Washington, D.C. we want to thank you very much for joining and we also want to thank those of you who are listening to this via the Balance of Power podcast. Now, we're going to do this call a little bit differently today. Normally we spend about 10 minutes just going through what's happening here in Washington. But as you pretty much all though the US Government has been shut and remains shut. And so I thought it'd be best to bring in a panel of experts from Bloomberg Intelligence, Bloomberg Economics and Bloomberg nef. The three research worms, the three research arms. Don't think we're worms. The three research arms of the Bloomberg terminal. Now there's going to be a lot of information flowing today, so if you do have access to a terminal and you want copies of any of the research or notes that we will be talking about or referring to today, please don't hesitate to reach out either to myself or to any of the individuals. We love it when you reach out to us and we'll get a copy of that for you. So just as a heads up before we talk about our turn to our panel, I just want to give the current situation and where we are in terms of the shutdown. Now we spent over the weekend and really there has been little to no negotiations between the Senate lawmakers, specifically Senator John Thune, and Senator Chuck Schumer. Now speaker of the House Mike Johnson even told his caucus today the House Republicans to not return to not return, to not return to Washington until after the Senate Democrats, in his words, signed on to the stopgap solution that opens the government until November 20th. So I actually think that we're not going to see much happening this week. Republicans won't be here. At least the House Republicans won't be here. And the polling data over the weekend essentially suggested that both parties feel that they're still quote, unquote, winning. Although I'd argue that shutdowns aren't about winning, it's about who's losing less. But both parties believe that they're actually in a position where they actually are politically advantageous. And that's one of those situations where, you know what, when both our parties are feeling good, then essentially nothing's gonna happen until one party begins to feel pressure. Now, a couple dates to keep in mind. The first is the government employees paycheck date is on October 10th. Military members get paid on October 15th. And that's one of the reasons why the House Republicans, I think aren't here is because then you're not gonna get a lot of questions of, well, why are congressional members paid? But staffers, government workers and the military aren't being paid. Also, just for what it's worth, I've gotten a lot of client questions on what happens with airplanes. Cause a lot of people I think are still TSA agents are going to be working. They're essential. They may be a little grumpy because they don't have a paycheck, so be nice to them, but you're still going to be able to fly. So for one reason, we've got a lot of questions from clients specifically that they want, they were going to go fly. So I just want to throw that out there. So first up, I want to bring in Anna Wong, our chief U.S. economist from Bloomberg Economics. So, Anna, you often go on Bloomberg TV and radio talking about unemployment data. You know what's happening with the government shutdown. I was listening to you just last week as you were on one of our media platforms talking about this. So as the government shutdown continues and as you know, potentially stretches a little bit longer, what are the things that you're looking for? What are the most key important factors that you're concerned about and just any other key thoughts you have on the shutdown?
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Sure. So I can give a few bullets on how the shutdown is affecting the economy. So first on gdp. So the rule of thumb for Fed staff is that for every week the government shut down, it shaves off about 0.2 percentage point of the annualized real GDP growth in the quarter. So this negative effect would be recuperated the moment that the government reopens. But you can imagine if the shutdown lasts until mid November, then there won't be enough time for the rest of the quarter to make up for the lost GDP. And you would start to see the overall quarterly GDP number be weaker as a result. But as as long as the shutdown is over by mid November, I expect very little impact on gdp. Now for the labor market statistics, which is something the market pays a lot of attention to. Non farm payrolls. The way it records furloughed worker is that it doesn't. So furloughed government workers will still be counted as employed. They will be. So they won't knock off anything from the non farm payrolls. However, the, you know, a vendor in Washington D.C. serving lunch to government workers. Well, because there's no government workers working for a whole month, they may be, they may not be, you know, most retail workers in restaurants, they are paid weekly. They may drop off the non farm payroll. So it could. We can still see leisure and hospitalities seeing some impact from permanent impacts from the shutdown unemployment rate. So furloughed workers are counted as temporarily unemployed in the unemployment survey. Which is why if BLS ended up being able to conduct the household survey, it will show that the unemployment rate would have spiked during this period of shutdown. So if the shutdown lasts through the reference week with a household survey which is October 12th to 18th, the unemployment rate will spike. Now then there's a different issue of will these data be collected at all? So if the shutdown lasts beyond 18 October, then the household survey collection would be disrupted because it's the 18th where they would be starting to conduct these surveys. And it's very difficult for the BLS to in November next time they survey the household to ask a backward question of were you employed in October? So the last time where we saw BLS had experienced such a big disruption to data collection was a long, long time ago in fact would have to be 2013, the 2018 shutdown. BLS was funded. So CPI and on farm payroll was not disrupted. The 2013 shutdown, well, it was only 10/1-16th. Right now Poly Market has it at 70% that this shutdown will last beyond October 15th. Meaning that most of October indeed would be the data collection effort would be disrupted if the betting market were right. So well, the last time we saw more than half of the month being disrupted by shutdown was actually 1995. So you really have to go back to, you know, almost like 30 years back to see what happened to data statistics if BLS were disrupted. Now getting to cpi, it looks like CPI won't be published after all, given the if the bend market were right. And also this would also mean that half the month, at least for October's CPI collection would be disrupted. Fortunately, it seems that about 40 to 50% of the CPI basket is based on transaction and administrative data. Which means that BLS could still have those records later on if they want to reconstruct October's CPI data. However, the housing survey is based on agents field agent. Also food prices and restaurant prices are also based on field collection. So you would have half of the CPI basket being disrupted. Now the significance of the October CPI collection being disrupted cannot be overstated because this is actually the month that would determine the cost of living adjustment for Social Security. So again, the last time you saw October CPI being disrupted by shutdown was 2013, only partially. So this time this shutdown may have implications on even Social Security cost of living adjustments. So that's it for me.
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So real. One quick follow up. One of the questions I've gotten from my clients is how do we think of data? Like obviously the data is not coming in when you do your analyses, like what are you, like how are you dealing with lack of data that's coming in from the government?
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Okay, so we are very busy finding ways to plug this data gap. So on jobless claims every Thursday, fortunately Department of labor actually published state level jobless claims data in the afternoon of Thursday. So our team will be compiling, coming up with a seasonally adjusted national database on these non seasonally adjusted state level jobless claims data that they have. So for jobless claims we still have those data. Now for non farm payrolls with many private providers last week we saw the ADP came out with a super negative number. But for my team we are compiling, we are putting a lot of time in, we are hiring, we are also buying very detailed level payrolls data to try to do it the way that BLS does. Now the problem of ADP's data last week is they don't process the data like BLS does. So that negative 32k I would take with a very heavy grain of salt because they're just not doing it the same way that BLS does it. So we think that at the end of the day, if you look at a range of alternative data, there is still positive job growth. Payrolls is probably growing at about 50 to 60k per month, which is above the break even for unemployment rate. The unemployment rate is probably stable at 4.3% now for CPI, my team has been scraping, we have now been tracking online prices. We have about 20 million of online prices. We are going to be putting out a series of work on how we are seeing these online prices. So we are also trying to process those data as close to how BLS does it as possible.
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Great. Perfect. Well, thank you very much. Appreciate you joining us. And you can read all of her stuff on the terminal. She's putting out a lot of great content. Duane, let's bring it to you. Dwayne normally sits three seats over from me today, but obviously he's in 731 Lexington Avenue, our headquarters up in New York. Dwayne, as you think of the shutdown and specifically this Obamacare subsidies argument, what impact does it have on health care? And what do you think? How do you think the Obamacare subsidy argument plays out with the Democrats and Republicans?
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Yeah. Thanks. So I think the way to look at this is we're not talking about just the subsidies as a whole. We're talking about a change that was made during the COVID era, Covid relief package that was somewhere around $2 trillion. Included were enhanced subsidies so that individuals making up to a certain income, say 150% of poverty, would pay nothing in premiums and then everybody else above that would pay less of their income in premiums. And also opened up this other category for people making over 400% of poverty, which is about $62,000 this year, to pay no more than 8.5% of their income. And that has led to a pretty significant boom in the number of people insured through the marketplace. We're up to about 24 million people right now. And insurers have done fairly well in terms of bringing in new customers. You have companies like Centene that are very heavily government insurance dominated through Medicaid, now ACA, UnitedHealth and some other companies. And so that generosity could end. And I think the Republican standpoint has been, well, one, they tried to get rid of the Affordable Care Act a couple years ago under the first Trump administration. They still see overall cost challenges with the program. It's subsidies aren't targeted. People with too high income are benefiting. And so there's this thinking that the subsidies should just go away, especially when you think about the fact that extending them for even one year is 25, 20 to 25 billion dollars. And I know Democrats are asking for a 10 year extension at around 3, 300, 350 billion over 10 years. So I think we can agree that's not going to happen. I think if you'd asked me at the beginning of the year what is going to happen here, I would say, well, there's just zero chance that this is going to get extended. But then over time we've seen polling from Republican firms basically say there's a lot of support from this, not just from Harris voters, but Trump voters, Republicans and independents. So I think that created a lot of pressure for some of the more moderate Republicans where because of the demographics there is a lot of support for extending these subsidies, but their constituents benefit from an extension. And so where this is probably going if this does get extended, if they do get extended is I'm guessing a two year extension because I can't imagine they'd want to come back and do this next year because a lot of this is consumers getting notices in October that their premiums are going to go up however many percent. So you consumers should be getting that soon if they haven't gotten that already. And next year if they only do a one year extension, they'll get it right before the election or as they're voting with early voting. So the outlines of a compromise are there where you can say, okay, if you're making over 400% of poverty, you either get no subsidy or less generous subsidy and then everybody beneath that gets less generous. So it's not a $20 billion new cost or if it's two years 40 to 45 billion. So that's probably where we're headed. But time will tell in terms of what kind of commitments maybe Democrats are willing to accept or at least a handful of Democrats are willing to accept to end the shutdown.
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You know, as an alumna of the Senate, you, Dwayne is one of our Senate whisperers. What's your thought on when to descend?
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Oh, I can see this going another week so into next week. I think that it seems as though there are conversations that are happening from a handful of members that probably didn't want to do this shutdown in the first place. And I think it ends with again some kind of agreement that there's a commitment now. It's not necessarily something that maybe Schumer will bless publicly but at least allows the party to move on. I think the base got their shut down. There has to be some way out of this and I think that's where we're heading is a commitment to address this for probably Two years.
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Sounds good. Well, thank you, Dwayne. Really appreciate it. Chris, let's go to you now, inside baseball information folks. When we had our Bloomberg chat trying to figure out what we were going to talk about today, Chris comes in and says I want to talk about E Commerce statecraft tools, which sounds really, really cool to me. So Chris, can you just give us a brief background of your role within Bloomberg Economics and the geoeconomics team and what you'd like to talk about in terms of econ statecraft tools and the shutdown?
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Sure. Thanks Nathan. Appreciate being able to join this morning. So I'm on this. I'm on the new geoeconomics team, part of Bloomberg Economics, joined about two and a half months ago. I was at the State Department prior to that and also on the National Security Council under both Biden and Trump. So got to see some of the evolution of these tools into this new Trump administration. So just wanted to give a brief overview of how this shutdown is affecting the tools that are available to the Trump administration. Starting with trade has been talked about. Many of the trade investigations are continuing, especially those related to national security. So those are all of the section 232 investigations specifically focused on things like semiconductors, critical minerals, processed critical minerals. We expect to see a result of that at the end of this month. There are some other trade actions that are paused, specifically some of the anti dumping countervailing duty or ADCVD investigations that require the U.S. international Trade Commission support and some of the other activities done by Commerce Export controls, a big, big focus. Last week Commerce announced they were going to be taking more of a Treasury sanction style approach where any subsidiary of an entity that is currently under export control rules, it's 50% more owned is now subject. That led to a huge explosion in a tripling basically of the number of entities. We're going to continue to see some export control action. What will be affected is licensing, at least the less urgent licensing, which could slow down some things for some firms. We'll have to see how this plays out. And certainly the longer the shutdown lasts, the more impactful this will be. Also with treasury, treasury will continue to maintain their sanctions list and enforcement of sanctions. That's considered a core national security activity by Treasury. Where we will see some slowdown at treasury is on cfius. So cfius, the Committee on Foreign Investment in the United States, approves transactions from foreign entities buying U.S. assets companies in big investments. We saw this famously with the Nippon Steel U.S. steel transaction. So the shutdown affects this process it basically leads to tolling. There are no more deadlines, so we can expect delays in the review of these cases and there will not be any legal penalty to the government for those delays. Moving on to commercial development finance. So this has been a big, you know, big in the news. The US Government has taken stakes in several companies over the past several months. What we're going to see so DFC is our big international development finance agency. They furloughed about two thirds of their staff. They are going to continue dispersing funds as they are legally obligated to do so for existing deals that they have. That's both on the loan and equity side of their transactions. But they won't be initiating any new investments while the shutdown is ongoing. DoD has a little bit more flexibility so they DPA, the Defense Production Act, Title 3, which we use to invest in critical minerals and other projects, tends to be operating on multi year or zero year funding. So they still have some funding to continue those operations. Especially where there's a clear national security nexus. It's a little bit less clear with the Office of Strategic Capital and their ability to do some of the more novel types of investments that we've seen recently. So I'll leave it there. We have a research note that's going come out later today, so feel free to ping me on the terminal if I can be of help and happy to chat anytime.
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Thanks. Yeah, no thanks Chris. And where's the best place to get your stuff? And also just going to highlight you have this Fault Lines newsletter that goes out from the team too, right?
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That's correct. And you can subscribe to our work geoecon. You type that into the terminal and you can subscribe and get updates every time. Our team, which is about 12 analysts, publish items on everything related to the Japanese election over the weekend to retrospective. I think we're going to have some pieces coming out on the anniversary of October 7th just laying out where things are and the impacts and what investors should be looking at.
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Yeah, I was talking to our colleague Adam Farrer from your team about the Japanese election in the pantry right before the call and there's some really interesting stuff coming out on that. So again, if you're interested in the Japanese election, feel free. We'll put you in touch. Great. Thanks Chris. Appreciate it. So Derek, let's talk about Bloomberg nef clean energy grants, infrastructure programs, you know, as you see the shutdown continuing and one of the questions we get often, in fact I got it from a Bloomberg analyst in London just This morning was how do we deal and how do we think about these grant cancellations? So what are you thinking in terms of, you know, these infrastructure projects and seeing announcements from President Trump in the White House that certain things are being canceled?
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Sure. So thanks Nathan for the intro and very happy to be here. For those who don't know, Bloomberg NEF is Bloomberg's research service focused on energy, commodities, energy transition and climate. And so we've been observing grant cancellations from the Trump administration for a while now. In fact, preceding the shutdown, There was about $8 billion in grant cancellations announced by the admin a few days ago, basically as part of the budget fight. Trump has openly said that he basically wants to make this hurt for Democrats. And so a lot of the programs that were highlighted were in Democratic states. Hydrogen hubs in Pacific Northwest, in California, which are pretty major economic development projects, at least politically, had about $2.2 billion, substantial chunk of that canceled. Grid projects in California and the upper Midwest, like Minnesota, accounted for about another billion dollars of that. But this is very much in continuity with the administration's approach before. In fact, some of these grants that were identified as being canceled on a list that leaked from the DOE were from the industrial demonstrations program which had already had a formal cancellation previously. And in fact, I think that's why the politics of this are not not necessarily as forceful to the Dems as the admin would have liked. The Dems hit back pretty quickly by putting out a list of congressional districts that were affected by these cuts. They included a substantial number of swing seats or Republican leaning seats in California and New York, some other jurisdictions where in the event of a wave election next year, there might be some vulnerability for Republicans. Although if you look at the state level level as well as the district level, generally speaking, the actual money in Republican districts is less affected. So I think this speaks to a broader issue of control of infrastructure permitting and financing that's in a bit of a tug of war right now between the executive branch and the legislative branch. The Trump Admin has been trying quite forcefully to cancel and remake funding opportunities with a wide amount of discretion in a way that Congress historically has been very jealous of losing such powers because of the same party control between Republicans in the legislature and in the executive. There hasn't been as much pushback this time. But I think there is a broader question certainly among appropriators in Congress over how far this can go. And I would say more broadly that there are legal questions proceeding about about how much executive work can remain funded and operational under the shutdown and how far it can go. So on the Dem side, there's not really as much leverage from these actions because I think there's a sense the Trump administration was canceling one of these anyway. Some of them they already had. And then on the other side, there's the question of how much of this is ultimately going to stick. And the administration itself is facing some challenges pushing forward its infrastructure permitting and funding work. Work as appropriations begin to lapse. They have existing funds they can draw on doe, EPA for a few days and then they're going to have to start furloughing people. Up to 90% of EPA staff might be furloughed, which is actually a bit of a problem for some of their deregulatory work potentially. And meanwhile, we're seeing some of these court battles directly affected by the shutdown. The Trump administration has tried to halt a lawsuit with Maryland over an offshore wind project they're trying to cancel some permits for. And they're. And then the judge in the case basically said you can try and use this shutdown as an excuse, but I'm not really going to let you do that. You may not have lawyers who are funded to work on this right now, but the case can proceed. So I think there's a bit of a complicated dance here. And the main impact is that the regulatory environment for infrastructure investments remains wildly uncertain. And with the long term impact that investors need to look at, I think one thing to look at down the line is what happens in Congress. As long as there's kind of bad blood on these funding and permitting negotiations, I think it hinders prospects for permitting reform in Congress because as one of the Dems main contentions here has been, they're not sure that there can be a really stable deal they trust the Trump administration to enforce. So if there is some kind of deal that addresses future funding and like the application of any regulations on permitting reform, that could create a bit more predictability. But right now I don't think that's the most likely outcome. We're going to see what this really results in at the end. But I think as Duane was saying, we're going to have a few more days of uncertainty here yet.
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Yeah, no, that makes sense. And so, you know, we're going to. We're actually getting close to 30 minutes, so we're going to leave it there. Derek, last question for you. Where can we find you on the terminal? You know, how can folks read your research?
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Absolutely. Go to Bnefgo on the terminal to see some of our latest research or nefw, which gets you to the BNF website for those who have access. Some of our stuff will also be featured in places like the Green Newsletter as well as Energy or the Elements newsletter.
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Okay, well great. Thank you everybody. Last thing, just as a heads up for those of you who have exposure to farmers or to agriculture, there's a lot of talk about potentially tomorrow Secretary Bessant announcing a farm aid deal. If you recall, back in the first Trump administration, they gave out about $23 billion in terms of farm aid. Currently right now they're talking about $10 billion. But there was some reporting last week that Republicans could potentially see up to $50 billion. So just as a heads up, there's some thought of that this could actually come out sometime tomorrow. So with that we're going to say thank you very much. We really appreciate you sticking around. I saw actually most of you stuck around for the entire 30 minutes, so we really apprec. Please don't hesitate to reach out and we'll talk soon.
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Our thanks to Nathan Dean, Bloomberg Intelligence Senior Policy Analyst, bringing you the latest installment of his weekly Washington Policy Pulse. For more from BI or to join this call live each week you can email Nathan@ndeanloomburg.net that's n d e a n bloomberg.net and come back to the podcast later today for the latest edition of Balance of Power.
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