The partial shutdown’s limited impacts on the supply chain and economy
The four-day partial government shutdown began January 31 and ended February 3, when the bipartisan spending bill was passed and signed into law. Because the partial shutdown was brief, its impact on the supply chain and economy is expected to be minimal, with temporary disruptions in federal pay and the release of economic data.
Why it matters: Federal government shutdowns typically pose a risk to economic stability and the Federal Reserve (Fed) monetary policy decisions. Including disruptions to key economic data, like the delayed job and inflation reports, and creating short-term economic impacts and market uncertainty — factors Fed officials evaluate to make evidence-based decisions.
Quick catch-up:
- On January 28, the Fed voted 10 to 2 to hold interest rates steady, as expected, for the first time since July 2025, rebounding the U.S. dollar and keeping the benchmark federal funds rate between 3.5% to 3.75%.
- Fed Chair Jerome Powell noted recent data showed economic growth and tentative signs of a stabilizing job market.
- On January 30, President Trump announced Kevin Warsh, former Fed governor, as his nominee to succeed Fed Chair Jerome Powell after his term ends in May.
The state of the labor market:
- The United States added 130,000 jobs in January, the strongest growth since December 2024. December 2025 figures were revised to 48,000 jobs, down from the 50,000 jobs initially reported.
- Unemployment fell to 4.3%, a one-tenth decline from December 2025.
- The labor force participation rate rose to 62.5%.
- The Consumer Price Index rose 2.4% year over year in January, down 0.3% from the prior month.
- The Producer Price Index rose 0.5% month over month in December 2025, the biggest rise since July 2025. The January report will be released Friday, February 27.
Global developments keep commodity markets shifting
The commodity market continues to experience significant changes due to geopolitical events, trade policies and economic factors, including President Trump’s nomination of Kevin Warsh to replace Jerome Powell as Fed Chair in May. These developments have driven fluctuations in the price and availability of key commodities in recent months.
By the numbers:
- Copper and aluminum prices have seen dramatic shifts, with copper declining slightly from record highs on January 30 after weeks of speculation tied to the potential Fed chair nominee and the U.S. dollar’s movements. The U.S. Midwest Premium for aluminum more than doubled since its tariffs took effect, driving domestic prices to rise faster than international prices.
- Prices on 3/4-inch steel have surged approximately 44% year over year. China’s crude steel production output dropped to a seven-year low, while its exports remain at record highs.
- PVC resin prices declined year over year, with many suppliers struggling to pass through price increases in recent months.
- Over the past three months, lumber prices declined 5%, increasing slightly by 0.37% month over month. Seasonal demand expectations have strengthened as builders begin positioning ahead of the spring construction period.
Rising tensions in the Middle East, especially near the Strait of Hormuz and the Gulf of Oman, partially contributed to higher oil prices as fears of potential disruption rose. The Organization of the Petroleum Exporting Countries (OPEC) saw output drop in January as lower production from Nigeria and Libya outweighed increases from other members.
What they’re saying: Industry leaders in January at the Fastmarkets Circular Steel Summit highlighted tariffs and trade policies as key factors strengthening the domestic steel market despite challenges that could impact supply chains and market stability.
Global container rates ease early in the month
Global container rates eased in early February as capacity continued to expand and demand softened modestly across key trade lanes. Container rates across all lanes declined 23% over the past month as carriers worked to artificially raise market rates through general rate increases at the start of the year.
- For the week ending February 5, the Drewry World Container Index decreased 7% for the fourth consecutive week due to a drop in rates on the Transpacific and Asia-Europe trade routes.
- S. container imports reached more than 2.3 million TEUs in January, an approximate 7% decline from a year prior when companies rushed to import goods before U.S. tariffs took effect and sent imports soaring to a record high for the month.
- S. imports from China are up 9% from December 2025, but are down 23% year over year and 25% below the July 2024 peak.
Why it matters: While the United States and China continue to signal a desire to manage ongoing trade tensions, the broader trade policy remains fragile and unpredictable. As companies diversify their supply chains to reduce reliance on China, import demand continues to shift to other Asian countries, particularly Vietnam, Thailand and Indonesia.
What they’re saying: Carriers increased blank sailings to counter softening demand following the end of the Lunar New Year cargo rush. Drewry expects spot rates to decline further in the coming weeks.
More shipping news: Major carriers have resumed routing vessels through the Red Sea and Suez Canal. But the United States recently issued a maritime advisory to American-flagged ships to keep away from Iranian waters when navigating the Strait of Hormuz as tensions remain high between the United States and Iran.
Trucking market tightens due to structural capacity constraints
The U.S. trucking market is facing signs of tightening driven by structural capacity constraints. While overall freight volumes remain moderate, storm disruptions and reduced carrier availability are pushing up costs.
Zoom in: In the week ending January 24, major freight hubs with 2.6 million loads posted to the DAT One truckload spot market were down 4% from the week before due to uncertainty from Winter Storm Fern.
Why it matters: These constraints are putting pressure on load-to-truck ratios and pricing. Spot rates increased temporarily in late January and early February as winter storms tightened capacity across key regions. While some easing is expected, baseline transportation costs are forecast to be slightly higher for 2026.
The big picture: Factors, such as carrier exits, slower equipment replacement and delayed investment, continue to reduce effective capacity. Regulatory challenges around Commercial Driver’s License (CDL) eligibility and training for “non-domiciled” drivers are heightened by removing drivers from the market.
Yes but, while these measures aim to enhance safety and stability, they also pose significant near-term challenges for the industry. While the current regulations are under legal review, it is estimated that 1 in 20 interstate CDL license holders will be forced to exit the market if the rule holds.
By the numbers:
- Load-to-truck ratios have increased 14% over the prior year and more than 70% on vans and flatbeds, respectively.
- The average U.S. monthly fuel prices in January are down from last month; gasoline prices are $2.94, down 0.8 cents, and on-highway diesel fuel prices are $3.52, down 0.9 cents.
- According to the Bureau of Transportation Statistics, the North American transborder freight moved by all modes of transportation decreased 4.7% in November 2025 to $124.8 billion from a year earlier.