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The Dictatorship

How the government shutdown could impact the US economy

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How the government shutdown could impact the US economy

WASHINGTON (AP) — Shutdowns of the federal government usually don’t leave much economic damage. But the one that started Wednesday looks riskier, not least because President Donald Trump is threatening to use the standoff to permanently eliminate thousands of government jobs and the state of the economy is already precarious.

For now, financial markets are shrugging off the impasse as just the latest failure of Republicans and Democrats to agree on a budget and keep the government running.

“Everyone seems quite complacent about the shutdown, assuming the Democrats and Republicans will come to terms and life will go on, as has been the case in past shutdowns,” the independent economist Ed Yardeni wrote in a commentary Thursday. “History could certainly repeat, especially with a man known for dealmaking sitting in the Oval Office.’’

But given the chasm separating the two political parties, Yardeni added, “the lack of caution is somewhat surprising.’’

Speaker of the House Mike Johnson, R-La., and GOP leaders, from left, Rep. Lisa McClain, R-Mich., Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., blame the government shutdown on Democrats during a news conference at the Capitol in Washington, Thursday, Oct. 2, 2025. (AP Photo/J. Scott Applewhite)

Speaker of the House Mike Johnson, R-La., and GOP leaders, from left, Rep. Lisa McClain, R-Mich., Majority Leader Steve Scalise, R-La., and Majority Whip Tom Emmer, R-Minn., blame the government shutdown on Democrats during a news conference at the Capitol in Washington, Thursday, Oct. 2, 2025. (AP Photo/J. Scott Applewhite)

The U.S. government has now shut down 21 times in the past half century. The last of those shutdowns was the longest — stretching five weeks in December 2018 into January 2019 during Trump’s first term.

Even that one barely left a mark on the world’s biggest economy: The Congressional Budget Office estimates that it shaved just 0.02% off 2019 U.S. gross domestic product — the nation’s output of goods and services.

The economic impact of shutdowns is usually fleeting. Federal workers get furloughed and the federal government delays some spending while they last. When they’re over, federal workers go back to their jobs and collect back pay, and the government belatedly spends the money it had withheld. It’s pretty much a wash.

“Government shutdowns are inconvenient and messy,″ said Scott Helfstein, head of investment strategy at the investment firm Global X. ”But there is little evidence that they have a significant impact on the economy. Typically, the lost economic activity, if meaningful in the first place, is recovered in the following quarter.″

Government benefit payments that provide crucial income support for millions of Americans, such as Social Security, and health care programs such as Medicare, won’t be disrupted by the shutdown.

Data from previous shutdowns have shown little impact on U.S. GDP unless they are extended, according to CBO Director Phillip Swagel. “The impact is not immediate, but over time, there is a negative impact of a shutdown on the economy,” he recently told The Associated Press.

The damage could be worse this go-around.

John O'Hara works on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)

John O’Hara works on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)

First, some government agencies dodged the 2018-2019 shutdown because they’d received funding in advance and could just continue operating. That hasn’t happened this time: The CBO estimates that about 750,000 federal employees could be temporarily laid off.

Trump is also considering something more destructive: His budget office has threatened the mass firing of federal workers this time, not just putting them on temporary furlough.

A “reduction in force’’ would not only lay off employees but eliminate their positions, threatening more upheaval for a workforce that’s already been purged by Trump. “We’d be laying off a lot of people that are going to be very affected, and they’re Democrats. They’re going to be Democrats,” the president said Tuesday.

Thomas Ryan of Capital Economics wrote in a commentary that “it is reasonable to assume that (Trump’s mass layoff threat) is political bluster, aimed at pressuring Democrats to approve a funding extension without concessions.” But, he added, “if followed through, it could have longer-term consequences, prolonging government downsizing and keeping the sector as a drag on payrolls into next year.”

Ryan Sweet, chief U.S. economist at Oxford Economics, estimates that the shutdown and temporary loss of income for federal workers could shave 0.1 to 0.2 percentage points from the nation’s annual growth rate in the fourth quarter for each week the government is closed. Some of that will be recovered once it reopens.

“The economic costs of government shutdowns are normally minimal unless they last for several weeks,” Sweet wrote.

The shutdown also comes at a time when the job market is already under strain, damaged by the lingering effects of high interest rates and uncertainty around Trump’s erratic campaign to slap taxes on imports from almost every country on earth and on specific products — from copper to foreign films.

Financial information is displayed as traders work on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)

Financial information is displayed as traders work on the floor at the New York Stock Exchange in New York, Wednesday, Oct. 1, 2025. (AP Photo/Seth Wenig)

Labor Department revisions earlier this month showed that the economy created 911,000 fewer jobs than originally reported in the year that ended in March. That meant that employers added an average of fewer than 71,000 new jobs a month over that period, not the 147,000 first reported. Since March, job creation has slowed even more — to an average 53,000 a month. During the 2021-2023 hiring boom that followed COVID-19 lockdowns, by contrast, the economy was creating 400,000 jobs a month.

The September jobs report was supposed to come out Friday — forecasters had expected to see 50,000 new jobs last month — but has been delayed indefinitely by the shutdown.

The economy is sending mixed signals, however. GDP growth came in at a strong 3.8% annual pace from April through June, reversing a 0.6% drop in the first three months of the year. But it’s not yet clear if that solid growth can continue, or if it will spur a rebound in hiring.

“The economy is very much on a ‘knife’s edge,’” said Michael Linden, senior policy fellow at the left-leaning Washington Center for Equitable Growth. “The economic data is pointing in different directions right now. Second-quarter GDP growth was strong, but how much of that was merely a bounce back from incredibly weak first quarter GDP is hard to know. What we know for sure is that the economy is creating fewer jobs, wage growth is slowing, and middle-class consumers are feeling pinched.”

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Associated Press Writer Fatima Hussein in Washington contributed to this story.

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The Dictatorship

Trump urges Israel to seize chance for peace ahead of Egypt summit and presses for Netanyahu pardon

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Trump urges Israel to seize chance for peace ahead of Egypt summit and presses for Netanyahu pardon

SHARM EL SHEIKH, Egypt (AP) — President Donald Trump called for a new era of harmony in the Middle East on Monday during a global summit on Gaza’s futuretrying to advance broader peace in the region after visiting Israel to celebrate a U.S.-brokered ceasefire with Hamas.

“We have a once-in-a-lifetime chance to put the old feuds and bitter hatreds behind us,” Trump said, and he urged leaders “to declare that our future will not be ruled by the fights of generations past.”

The whirlwind trip, which included the summit in Egypt and a speech at the Knesset in Jerusalem earlier in the day, comes at a fragile moment of hope for ending two years of war between Israel and Hamas.

“Everybody said it’s not possible to do. And it’s going to happen. And it is happening before your very eyes,” Trump said alongside Egyptian President Abdel Fattah el-Sissi.

Nearly three dozen countries, including some from Europe and the Middle East, were represented at the summit. Israeli Prime Minister Benjamin Netanyahu was invited but declined, with his office saying it was too close to a Jewish holiday.

Trump, el-Sissi, Turkish President Recep Tayyip Erdogan and Qatari Emir Tamim bin Hamad Al Thani signed a document outlining a broad vision that Trump said would lay the groundwork for Gaza’s future.

Despite unanswered questions about next steps in the Palestinian enclave, which has been devastated during the conflictTrump is determined to seize an opportunity to chase an elusive regional harmony.

He expressed a similar sense of finality about the Israel-Hamas war in his speech at the Knesset, which welcomed him as a hero.

“You’ve won,” he told Israeli lawmakers. “Now it is time to translate these victories against terrorists on the battlefield into the ultimate prize of peace and prosperity for the entire Middle East.”

Trump promised to help rebuild Gaza, and he urged Palestinians to “turn forever from the path of terror and violence.”

“After tremendous pain and death and hardship,” he said, “now is the time to concentrate on building their people up instead of trying to tear Israel down.”

Trump even made a gesture to Iran, where he bombed three nuclear sites during the country’s brief war with Israel earlier this year, by saying “the hand of friendship and cooperation is always open.”

Trump’s whirlwind trip

Trump arrived in Egypt hours late because speeches at the Knesset continued longer than expected.

“They might not be there by the time I get there, but we’ll give it a shot,” Trump joked after needling Israeli leaders for talking so much.

Twenty hostages were released Monday as part of an agreement intended to end the war that began on Oct. 7, 2023, with an attack by Hamas-led militants. Trump talked with some of their families at the Knesset.

“Your name will be remembered to generations,” a woman told him.

Israeli lawmakers chanted Trump’s name and gave him standing ovation after standing ovation. Some people in the audience wore red hats that resembled his “Make America Great Again” caps, although these versions said “Trump, The Peace President.”

Netanyahu hailed Trump as “the greatest friend Israel has ever had in the White House,” and he promised to work with him going forward.

“Mr. President, you are committed to this peace. I am committed to this peace,” he said. “And together, Mr. President, we will achieve this peace.”

Trump, in an unexpected detour during his speech, called on the Israeli president to pardon Netanyahu, whom he described as “one of the greatest” wartime leaders. Netanyahu faces corruption chargesalthough several hearings have been postponed during the conflict with Hamas.

The Republican president also used the opportunity to settle political scores and thank his supporters, criticizing Democratic predecessors and praising a top donor, Miriam Adelsonin the audience.

Trump pushes to reshape the region

The moment remains fragile, with Israel and Hamas still in the early stages of implementing the first phase of Trump’s plan.

The first phase of the ceasefire agreement calls for the release of the final hostages held by Hamas; the release of hundreds of Palestinian prisoners held by Israel; a surge of humanitarian aid to Gaza; and a partial pullback by Israeli forces from Gaza’s main cities.

Trump has said there’s a window to reshape the region and reset long-fraught relations between Israel and its Arab neighbors.

“The war is over, OK?” Trump told reporters traveling with him aboard Air Force One.

“I think people are tired of it,” he said, emphasizing that he believed the ceasefire would hold because of that.

He said the chance of peace was enabled by his Republican administration’s support of Israel’s decimation of Iranian proxies, including Hamas in Gaza and Hezbollah in Lebanon.

The White House said momentum is also building because Arab and Muslim states are demonstrating a renewed focus on resolving the broader, decades-long Israeli-Palestinian conflict and, in some cases, deepening relations with the United States.

In February, Trump had predicted that Gaza could be redeveloped into what he called “the Riviera of the Middle East.” But on Sunday aboard Air Force One, he was more circumspect.

“I don’t know about the Riviera for a while,” Trump said. “It’s blasted. This is like a demolition site.” But he said he hoped to one day visit the territory. “I’d like to put my feet on it, at least,” he said.

The sides have not agreed on Gaza’s postwar governance, the territory’s reconstruction and Israel’s demand that Hamas disarm. Negotiations over those issues could break down, and Israel has hinted it may resume military operations if its demands are not met.

Much of Gaza has been reduced to rubbleand the territory’s roughly 2 million residents continue to struggle in desperate conditions. Under the deal, Israel agreed to reopen five border crossings, which will help ease the flow of food and other supplies into Gaza, parts of which are experiencing famine.

Roughly 200 U.S. troops will help support and monitor the ceasefire deal as part of a team that includes partner nations, nongovernmental organizations and private-sector players.

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Megerian reported from Washington. Associated Press writers Will Weissert and Seung Min Kim in Washington contributed to this report.

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Follow the AP’s coverage of the Israel-Hamas war at https://apnews.com/hub/israel-hamas-war.

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Naked bike riders demonstrate against troops in Portland…

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Naked bike riders demonstrate against troops in Portland…

PORTLAND, Ore. (AP) — Protesters rallying against the Trump administration in Portland put the city’s quirky and irreverent reputation on display Sunday by pedaling through the streets wearing absolutely nothing — or close to it — in an “emergency” edition of the annual World Naked Bike Ride.

Crowds that have gathered daily and nightly outside the immigration facility in Oregon’s largest city in recent days have embraced the absurd, donning inflatable frog, unicorn, axolotl and banana costumes as they face off with federal law enforcement who often deploy tear gas and pepper balls.

The bike ride is an annual tradition that usually happens in the summer, but organizers of this weekend’s hastily called event said another nude ride was necessary to speak out against President Donald Trump’s attempts to mobilize the National Guard to quell protests.

Rider Janene King called the nude ride a “quintessentially Portland way to protest.”

The 51-year-old was naked except for wool socks, a wig and a hat. She sipped hot tea and said she was unbothered by the steady rain and temperatures in the mid-50s (about 12 Celsius).

“We definitely do not want troops coming into our city,” King said.

Bike riders made their way through the streets and to the city’s U.S. Immigration and Customs Enforcement building. Authorities there ordered people to stay out of the street and protest only on sidewalks or risk being arrested.

The city is awaiting the ruling of an appeals court panel on whether Trump can send out the federalized troops after a federal judge on Oct. 5 ordered a temporary hold on deployment.

“Joy is a form of protest. Being together with mutual respect and kindness is a form of protest,” the ride’s organizers said on Instagram. “It’s your choice how much or little you wear.”

Fewer people were fully naked than usual — likely because of the cool, wet weather — but some still bared it all and rode wearing only bike helmets.

Naked bike rides have thronged the streets of Oregon’s largest city every year since 2004, often holding up traffic as the crowd cycles through with speakers playing music. Some years have drawn roughly 10,000 riders, according to Portland World Naked Bike Ride.

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Weber reported from Los Angeles.

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The Dictatorship

China calls for US to withdraw tariff threat

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China calls for US to withdraw tariff threat

BANGKOK (AP) — China did not back down Monday in a back-and-forth with the U.S. over trade, calling for U.S. President Donald Trump to withdraw his latest threat of a 100% tariff and other export control measures announced over the weekend.

In the latest escalation of the trade war between the two nations, Trump issued the tariff threat on all Chinese imports into the U.S. after China placed stricter restrictions Thursday on rare earths, a vital resource used in electronics.

The Chinese announcement was an apparent surprise to Trump, who called it an “out of the blue” move. While Trump did not withdraw the economic threat, he sounded more conciliatory than in the past, saying in a Truth Social post Sunday, “The U.S.A. wants to help China, not hurt it!!!”

China’s Ministry of Commerce issued a lengthy response Sunday saying the U.S. was “severely damaging the atmosphere of trade negotiations.”

“China urges the U.S. to promptly correct its erroneous practices,” Chinese Ministry of Foreign Affairs spokesman Lin Jian said Monday. “If the U.S. insists on going its own way, China will certainly take resolute measures to safeguard its legitimate rights and interests.”

Both nations have leveraged multiple dimensions of the trade relationship in the trade war, with actions ranging from U.S. restrictions on China’s ability to import advanced computer chips, China ending purchases of American soybeans and an exchange of tit-for-tat port fees.

Economic indicators show the retaliatory actions and uncertainty are impacting trade between the countries. Chinese trade data release Monday showed exports to the U.S. have fallen for six straight months, dropping 27% in September from the year before.

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