Fashion
Downside risk to near-term outlook from US govt shutdown: Treasury
Artificial intelligence (AI) could have disruptive impacts on the economy and labour markets as businesses and individuals integrate it or fail to, according to the Economy Statement for the Treasury Borrowing Advisory Committee.
US economic growth solidified in Q3 2025, with steady business investment and consumer demand, but each week of the unnecessary government shutdown is adding drag to Q4 GDP and introduces downside risk to the near-term outlook, the Economy Statement for the Treasury Borrowing Advisory Committee said.
AI could disrupt the economy and labour markets as businesses and individuals integrate it or fail to.
Yields on US Treasury notes and bills eased over Q3 2025 and labour markets stabilised in July and August, with modest employment growth consistent with that of Q2, the statement said.
Forced deportation and voluntary self-deportation of illegal immigrants has reduced labour supply, but labour demand has similarly decreased. This has kept aggregate labour markets roughly in balance.
With modest hiring but low layoff rates, firms appear to be planning for output growth via productivity improvements, a release from the treasury department said.
In just July and August, real personal consumption expenditures (PCE) were up by 2.8 per cent at an annual rate, picking up modestly from the Q2 figure.
Total payroll job growth averaged 51,000 per month during July and August, after averaging 55,000 per month during Q2 2025. The slower growth from the second to third quarters, however, partly reflected the shedding of federal government jobs—with a monthly average decrease of 12,500 in federal employment.
By contrast, private sector job creation remained steady at 58,000 jobs per month in July and August. Although this growth rate is below the roughly 100,000 jobs added per month in Q1 2025, it likely reflects the drop in population growth related to the forced and self-deportation of illegal immigrants, the release noted.
From May 2024 to July 2025, monthly unemployment rates fluctuated within a narrow range of 4 per cent and 4.2 per cent. In August, the unemployment rate ticked up to 4.3 per cent of the labour force, and the average for July and August was 4.29 per cent.
Unemployment rates in Q3 2025 remained just below the Congressional Budget Office’s 4.4-per cent estimate of the non-cyclical unemployment rate—or the rate of unemployment that is consistent with stable inflation and excludes fluctuations in aggregate demand.
Meanwhile, layoffs and discharges remained low. Private-sector layoffs and discharges accounted for just 1.3 per cent of employment in July and August, in line with the low rates that persisted during President Donald Trump’s first term before the pandemic.
Inflation remained above the target of 2 per cent in Q3 2025. As of September 2025, CPI inflation was 3 per cent on a twelve-month basis. The elevated annual growth partly reflects the strong price pressures from September 2024 to January 2025, in which headline CPI rose by 4.1 per cent at an annualised rate. From January 2025 to September 2025, CPI growth was more moderate at 2.5 per cent at an annual rate.
Monthly core CPI inflation averaged 0.3 per cent in Q3 2025. Over the twelve months through September 2025, the core inflation rate was 3 per cent. So far this year, annual core inflation has ranged between 2.8 per cent and 3.1 per cent, save for the 3.3-per cent rating realised in January from when President Trump assumed office.
Fibre2Fashion News Desk (DS)