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November Market Commentary: Government Shutdown, Labor Slowdown, but the Economy is Still Standing Thumbnail

November Market Commentary: Government Shutdown, Labor Slowdown, but the Economy is Still Standing

Markets & Economy

October Recap and November Outlook

We’re closing in on year-end with the longest government shutdown in U.S. history and an election season that shows growing frustration with business as usual.

While the shutdown has paused the release of official government data, the economy itself seems to be holding steady. Consumer confidence has slipped, but many companies report that people are still spending, even if a bit more selectively.

The Federal Reserve met at the end of October and cut its key interest rate to a range of 3.75% to 4%. Still, the Fed signaled that another rate cut in December is far from guaranteed.

Let's dig into the data:

  • Because of the shutdown, no new official labor statistics were released. The Chicago Fed’s blended estimate of the unemployment rate, which combines public and private data, ticked up slightly to 4.36% in October from 4.23% in August.
  • Private-sector data from ADP showed a gain of 42,000 jobs in October, marking a welcome turnaround after two months of contraction.
  • The University of Michigan Consumer Sentiment Index dropped three points in November, reaching its lowest level since 2022.
  • The Atlanta Fed’s GDPNow model estimates 4.0% real GDP growth (seasonally adjusted annual rate) for the third quarter of 2025.

What Does It All Mean?

For now, the markets seem to be shrugging off the shutdown. But disruptions like the growing wave of canceled flights across major airlines could push Congress to move faster on a deal.

Despite the noise, both markets and the broader economy are showing surprising resilience. Investors seem to trust that the Fed will not overreact, even as expectations for future rate cuts shift.

Here’s why that matters: the Fed Funds rate acts like a heartbeat for the economy. It influences everything from mortgage and credit card rates to business loans. Lower rates generally make it easier for companies to grow and for consumers to borrow, which helps keep money circulating.

All year, investors have been expecting rate cuts as inflation cooled and the job market stayed steady. But uncertainty from tariffs, political standoffs, and now the shutdown has clouded the outlook. Fed Chair Jerome Powell made it clear that another rate cut in December is not a sure thing.

Even so, equity markets have stayed upbeat. Corporate tax incentives and individual tax refunds from the recent tax reforms have given both companies and consumers a lift, fueling earnings and spending alike.

Chart of the Month: Inflation is holding steady

(Source: Axios)

October Equity Market Highlights

  • S&P 500: +2.27%
  • Dow Jones Industrial Average: +2.51%
  • S&P MidCap 400: –0.53%
  • S&P SmallCap 600: –0.95%

(Source: S&P Global, performance as of October 31, 2025)

Six of the eleven S&P 500 sectors finished higher. Five of the “Magnificent Seven” stocks gained, while Meta and Microsoft slipped. Market volatility increased to 1.00%, up from 0.69% in September, with four trading days seeing 1% or more moves compared to none in the prior month.

October Bond Market Highlights

  • 10-Year Treasury Yield: 4.09% (down from 4.16%)
  • 30-Year Treasury Yield: 4.66% (down from 4.74%)
  • Bloomberg U.S. Aggregate Bond Index: +0.38%
  • Bloomberg Municipal Bond Index: +1.10%

The Takeaway

November is a good time to step back, check your progress, and make sure your plan still lines up with your goals. If you are age 60 to 63, you now qualify for a “super catch-up” contribution to your retirement plan. This lets you add up to $11,250 total, which includes the standard $7,500 catch-up plus an additional $3,750 boost.

Starting in 2026, higher-income earners will have to make catch-up contributions in a Roth account, so taking advantage of the current rules before they change could pay off. If you are not eligible for a catch-up, maxing out your regular contributions still helps you capture any company match and maximize tax benefits.

This is also the perfect time to review your charitable giving strategy. Being intentional about where your dollars go can amplify your impact and help with your year-end tax planning.

With markets still swinging, consider tax-loss harvesting to offset gains and improve your tax outlook before December 31.

A little year-end planning now can go a long way toward keeping your finances aligned with your goals and your values.

This work is powered by Advisor I/O under the Terms of Service and may be a derivative of the original. The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.