Connect with us

Business

How the federal government hurt the economy: $11 billion vanishes with 1.25 million unpaid and 2,000 canceled flights

Published

on



The longest federal government shutdown in U.S. history appears to be nearing an end, but not without leaving a mark on an already-struggling economy.

About 1.25 million federal workers haven’t been paid since Oct. 1. Thousands of flights have been canceled, a trend that is expected to continue this week even as Congress moves toward reopening the government. Government contract awards have slowed and some food aid recipients have seen their benefits interrupted.

Most of the lost economic activity will be recovered when the government reopens, as federal workers will receive back pay. But some canceled flights won’t be retaken, missed restaurant meals won’t be made up, and some postponed purchases will end up not happening at all.

“Short-lived shutdowns are usually invisible in the data, but this one will leave a lasting mark,” Gregory Daco, chief economist at accounting giant EY said, “both because of its record length and the growing disruptions to welfare programs and travel.”

The Congressional Budget Office estimated that a six-week shutdown will reduce growth in this year’s fourth quarter by about 1.5 percentage points. That would cut growth by half from the third quarter. The reopening should boost first-quarter growth next year by 2.2 percentage points, the CBO projected, but about $11 billion in economic activity will be permanently lost.

The previous longest government shutdown, in 2018-2019, lasted 35 days but only partially shut the government because many agencies had been fully funded. It only nicked the economy by about 0.02% of GDP, the CBO said then.

The current shutdown is adding to the economy’s existing challenges, which include sluggish hiring, stubbornly elevated inflation, and President Donald Trump’s tariffs, which have caused uncertainty for many businesses. Still, few economists foresee a recession.

About 650,000 federal workers didn’t work during the shutdown, which will likely boost the unemployment rate by about 0.4 percentage points in October, or to 4.7% from 4.3% in August, when the last report was released. Those workers would all then be counted as employed once the government reopens.

Here are the ways the government closure is weighing on the economy:

Missed paychecks

All told, federal workers will have missed about $16 billion in wages by mid-November, the CBO estimates. That has meant less spending at stores, restaurants, and likely reduced holiday travel. Large purchases will probably be postponed, slowing the broader economy.

Trump had threatened during the shutdown to not provide back pay but the deal struck in Congress would replace those lost wages once the government reopens.

The shutdown has added to the Washington, D.C. area’s economic woes, where the unemployment rate was already 6% before the shutdown, after Trump’s cuts to the federal workforce this spring caused job losses. While the Washington, D.C. area — including the nearby suburbs in Virginia and Maryland — has the highest concentration of federal workers, most live and work outside of the nation’s capital.

Federal workers make up about 5.5% of Maryland’s workforce, according to the Bipartisan Policy Center. But they also comprise 2.9% of New Mexico’s workers, 2.6% of Oklahoma’s, and 3.8% of Alaska’s.

Then there are the federal contractors. Bernard Yaros, an economist at Oxford Economics, estimates they could total as many as 5.2 million, and they are not guaranteed back pay once the shutdown ends.

Flight disruptions

Airlines scrapped more than 2,000 flights by Monday evening after canceling 5,500 since Friday on orders from the Federal Aviation Administration, which is seeking to reduce the burden on overworked air traffic controllers, who have now missed two paychecks.

Even before the flight cancellations, Tourism Economics, an economic consulting firm, estimated that the shutdown would reduce travel spending by $63 million a day, which means a six-week standoff would cost the travel industry $2.6 billion.

The canceled flights also mean less business for hotels, restaurants, and taxi drivers. And federal employees have already pulled the plug on upcoming trips, according to Tourism Economics, which may not be able to be rescheduled even when the government does reopen.

Consumer sentiment

The shutdown has worsened Americans’ outlook on the broader economy. Declining consumer sentiment can over time reduce spending and slow growth, though in recent years Americans have kept shopping even when their outlooks turned grim.

Consumer sentiment dropped to a three-year low and close to the lowest point ever recorded in a survey by the University of Michigan, reported Friday, with pessimism over personal finances and anticipated business conditions weighing on Americans.

The November survey showed the index of consumer sentiment at 50.4, down a startling 6.2% from last month and a plunge of nearly 30% from a year ago.

Federal spending

While the shutdown hasn’t cut off all federal government spending, it has reduced purchases of equipment and has cut off the issuance of new contracts.

Yaros estimates that about $800 million in new contracts were at risk of not being awarded each day of the shutdown.

“The federal award spigot has all but turned off at the Department of Defense, NASA, and the Department of Homeland Security,” Yaros wrote.

SNAP benefits

The shutdown delayed the payment of $8 billion in monthly SNAP food aid to 42 million recipients in November, creating a significant financial disruption for many households that likely reduced spending. Some states have managed to pay full benefits for this month, though the Trump administration is still fighting over the issue in court.

The deal currently under consideration in Congress to reopen the government includes full funding of SNAP benefits.

Interest rate cuts

The government shutdown cut off the flow of economic data on unemployment, inflation, and retail spending that the Federal Reserve depends on to monitor the economy’s health. Even as the government reopens, some of that data will still be delayed. As a result, the Fed may not deliver a third interest rate cut at its December meeting, which was widely expected before the shutdown.

“What do you do if you’re driving in the fog? You slow down,” Fed Chair Jerome Powell said at a news conference late last month.

Powell said the Fed’s interest-rate setting committee is deeply divided over whether to reduce its key rate, partly because the economy’s health is unusually cloudy right now. The government has missed two monthly jobs reports and the October inflation data, scheduled to be published Thursday, will likely never be issued.

Powell said a rate cut in December was not a “foregone conclusion” and added that the lack of data could contribute to a decision by the Fed to skip a rate cut at its next meeting December 9-10. Fewer rate cuts could discourage borrowing and spending and weigh on the economy in the coming months.



Source link

Continue Reading

Business

Billionaire Palantir cofounder Joe Lonsdale calls elite college undergrads a ‘loser generation’ as data reveals rise in students seeking support for disabilities

Published

on



That reality is showing up on a campus. A growing share of college students are seeking medical evaluations for ADHD, anxiety, and depression—and requesting academic accommodations such as extended time on exams and papers. At some of the country’s selective universities, the numbers are striking: more than 20% of undergraduates at Brown and Harvard are registered as disabled. At UMass Amherst, it’s 34%; Stanford, 38%, according to data analyzed by The Atlantic.

While it’s clear that many students requesting accommodations do so for legitimate medical reasons and that increased diagnoses may reflect greater mental-health awareness, some experts have raised concerns about overdiagnosis and whether universities are making it too easy for students to qualify. And the debate has set off a wildfire on social media this week, catching the attention of high-profile business leaders, including Joe Lonsdale, the billionaire venture capitalist and Palantir cofounder.

Lonsdale’s response offered no sympathy. “Loser generation,” he wrote in reaction to a graph showing the rising number of undergraduate students reporting disabilities.

“At Stanford it’s a hack for housing though and at some point I get it, even if it’s not my personal ethics. Terrible leadership from the university.”

He argued that families have been slowly using disability accommodations to give their children an academic advantage—when they might not actually need it.

“Claiming your child has a disability to give them a leg up became an obvious dominant game theoretic strategy for parents without honor in the 2010’s,” Lonsdale wrote earlier this month on X. “Great signal to avoid a family / not do business with parents who act this way.”

And while it’s unclear how many students, if any, are trying to game the system, Lonsdale has made his broader view clear: he doesn’t think universities are preparing young people—or evaluating them—in ways that matter.

“No great companies are interested in the BS games played by universities,” he added.

Fortune reached out to Lonsdale for further comment.

Lonsdale’s complicated history with higher education

Though a Stanford alum himself, Lonsdale has a complicated history with the institution and higher education more broadly.

In the early 2010s, while serving as a mentor in a Stanford tech entrepreneurship course, Lonsdale was accused of sexual assault by a student—and banned from mentoring undergraduates for 10 years and from campus entirely. The assault charges were later dropped, but Lonsdale acknowledged violating a rule prohibiting consensual relationships between mentors and students.

Less than a decade later, in 2021, Lonsdale cofounded his own school—the University of Austin—with Niall Ferguson, Bari Weiss, and others. The institution prides itself on freedom of speech and overcoming the “mediocrity” of traditional higher education. It welcomed its first group of undergraduates last fall and remains unaccredited.

The school has drawn support from Lonsdale’s fellow Palantir cofounder and Stanford alum Alex Karp, who has also criticized the college system.

“Everything you learned at your school and college about how the world works is intellectually incorrect,” Karp, Palantir’s CEO, told CNBC earlier this year.

Instead, the 58-year-old said Palantir is building a new credential “separate from class or background,” that is the “best credential in tech.”

“If you did not go to school, or you went to a school that’s not that great, or you went to Harvard or Princeton or Yale, once you come to Palantir, you’re a Palantirian,” Karp said during an earnings call earlier this year. “No one cares about the other stuff.”



Source link

Continue Reading

Business

Exclusive: Crypto startup LI.FI raises $29 million for cross-blockchain price discovery tool

Published

on



When businesses decide to engage with crypto, they quickly discover the landscape is fragmented across numerous blockchains. If they want to move assets between different chains, they must often rely on a technology called bridging that can prove insecure and expensive. Philipp Zentner, cofounder and CEO of LI.FI, created his company to address these issues. The startup provides businesses with price comparisons of exchange rates and bridging fees. It also aims to find businesses the most efficient and cost-effective pathway for each transaction. 

On Thursday, LI.FI announced that it raised $29 million in funding led by Multicoin and CoinFund, bringing the total capital to about $52 million. Zentner did not disclose the company’s valuation. 

“You can think of us like a combination of Google Flights and Google Maps,” he said in an interview with Fortune. “[We’re] a competitive price comparison and transaction pathfinding for businesses in crypto finance.”

The businesses that LI.FI partners with are fintechs, brokerage apps, trading desks, wallets, and neobanks. The startup has more than 800 partners, including Robinhood, Binance, and Kraken. The company says that its value proposition is that its service allows companies to go to market faster and saves them time on research, integration, and maintenance. 

Zentner says that LI.FI is profitable and generates revenue through transaction fees, though he declined to disclose specific revenue numbers. It has $8 billion in monthly transaction volume as of October, which is about seven times more than its monthly volume from a year prior. The company has more than 100 employees. 

“As crypto trading becomes a core feature inside mainstream fintech apps, the hardest problem is…making fragmented blockchains, liquidity, and execution work seamlessly together,” said Spencer Applebaum, investment partner at Multicoin Capital, in a statement. “LI.FI Protocol gives fintechs and web3 wallets a single API to offer both trading and cross-chain asset movement, handling on-chain routing and execution behind the scenes.”

With the new funding, LI.FI plans to expand into different transaction domains, including perpetual futures, yield opportunities, prediction markets, and lending markets. Zentner says with the new capital he also aims to hire more employees.

Join us at the Fortune Workplace Innovation Summit May 19–20, 2026, in Atlanta. The next era of workplace innovation is here—and the old playbook is being rewritten. At this exclusive, high-energy event, the world’s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now.



Source link

Continue Reading

Business

A San Francisco woman just gave birth in a Waymo robotaxi — and Waymo says it’s not the first time

Published

on



 Self-driving Waymo taxis have gone viral for negative reasons involving the death of a beloved San Francisco bodega cat and pulling an illegal U-turn in front of police who were unable to issue a ticket to a nonexistent driver.

But this week, the self-driving taxis are the bearer of happier news after a San Francisco woman gave birth in a Waymo.

The mother was on her way to the University of California, San Francisco medical center Monday when she delivered inside the robotaxi, said a Waymo spokesperson in a statement Wednesday. The company said its rider support team detected “unusual activity” inside the vehicle and called to check on the rider as well as alert 911.

Waymo, which is owned by Google’s parent company, Alphabet, declined to elaborate on how the vehicle knew something was amiss.

The company has said it has cameras and microphones inside as well as outside the cars.

The taxi and its passengers arrived safely at the hospital ahead of emergency services. Jess Berthold, a UCSF spokesperson, confirmed the mother and child were brought to the hospital. She said the mother was not available for interviews.

Waymo said the vehicle was taken out of service for cleaning after the ride. While still rare, this was not the first baby delivered in one of its taxis, the company said.

“We’re proud to be a trusted ride for moments big and small, serving riders from just seconds old to many years young,” the company said.

The driverless taxis have surged in popularity even as they court higher scrutiny. Riders can take them on freeways and interstates around San Francisco, Silicon Valley, Los Angeles and Phoenix.

In September, a Waymo pulled a U-turn in front of a sign telling drivers not to do that, and social media users dumped on the San Bruno Police because state law prohibited officers from ticketing the car. In October, a popular tabby cat named Kit Kat known to pad around its Mission District neighborhood was crushed to death by a Waymo.



Source link

Continue Reading

Trending

Copyright © Miami Select.