The Business Landscape Amid Government Shutdown: Insights from CEOs and Key Developments

Government Shutdown Looms as White House Withholds $18 Billion in Infrastructure Funds from NYC

In a startling turn of events, the White House announced yesterday that it would withhold $18 billion in federal infrastructure funds earmarked for New York City, citing allegations of “discriminatory, unconstitutional” contracting processes. This news broke during a conversation I was having with a CEO about the potential business ramifications of a looming government shutdown. “Whoa! Look at this,” he exclaimed, reading the allegations. “If you work with the government, that could be more significant.”

The potential impact of a government shutdown is contingent on its duration and the reactions of those affected. While investors are expressing discontent, the sentiment may be fleeting. Approximately 75% of federal employees are classified as “essential” and are required to continue working, but the prospect of unpaid wages could lead to absenteeism. As one CEO pointed out, a surge of no-show TSA workers might result in longer security lines, but a handful of “sick” air traffic controllers could severely disrupt air travel.

Historically, the U.S. has endured ten government shutdowns since the current budget policy was established in 1976. However, this time, the landscape is different. Recent cuts and policy shifts have already disrupted various government operations, from education grants to public health programs, making an “orderly shutdown” a complex challenge to navigate. The consensus among CEOs I spoke with yesterday was clear: “Check back in a week or two.”

While the business community remains vigilant about the economic fallout from a shutdown, leaders are also focused on growth, talent acquisition, and technological advancements in sectors like clean energy and artificial intelligence. Events like the upcoming Fortune Global Forum in Riyadh on September 26-27 are crucial for leaders to connect and address shared challenges. Notable CEOs attending include Qualcomm’s Cristiano Amon, Delta’s Ed Bastian, and JPMorgan Chase’s Mary Callahan Erdoes, among others.

Top News Highlights

• Trump Uses Shutdown to Cut Spending: President Trump has called for using the shutdown as an opportunity to eliminate waste and fraud, with White House budget director Russell Vought indicating that $26 billion in funding for previously approved programs is on hold, particularly affecting Democrat-led states.

• U.S. Intelligence Support for Ukraine: In a significant policy shift, the White House has approved sharing intelligence with Ukraine to assist in long-range strikes against Russia, potentially targeting critical infrastructure.

• Supreme Court Delays Decision on Fed’s Cook: The Supreme Court has postponed its decision on Fed Governor Lisa Cook’s lawsuit against President Trump until January, suggesting skepticism about the legality of her dismissal.

• Corporate Credit Market Concerns: PIMCO President Christian Stracke warned of “cracks” in the corporate credit market, citing difficulties for companies seeking debt funding amid high-profile defaults.

• Ralph Lauren’s Turnaround: Under CEO Patrice Louvet, Ralph Lauren has returned to its luxury roots, achieving profits at a 13-year high.

• Rise of Co-CEOs: Recent weeks have seen a trend of companies like Spotify and Oracle appointing co-CEOs, a phenomenon dubbed the “rise of the bro-co-CEO.”

• Citi Mandates AI Training: Citi is requiring AI training for most of its 229,000 employees to enhance their skills in leveraging artificial intelligence.

As the situation unfolds, the business community remains on high alert, balancing immediate concerns with long-term growth strategies. For ongoing updates, stay tuned to CEO Daily.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com