The likelihood of another government shutdown by the end of this week has spiked, as markets take heed of incensed policymakers following the shooting of Minnesota nurse Alex Pretti on Saturday.
Prior to Jan. 24, odds of another federal shutdown had sat at around 30% over the past few weeks. That changed dramatically as reports spread of the 37-year-old Pretti’s death this weekend. At the time of writing, speculators on Polymarket estimate a 79% chance of another government shutdown come Jan. 31—this Saturday.
The possibility of a further partial government shutdown, following a similar standoff late last year, has been on the table for some time. That’s because government funding for a significant number of federal agencies is due to run out at the end of January, and a new package will need to be passed for their work to continue.
But the events of the weekend have fractured an already divided Capitol Hill even further. The rift is not simply between the political parties. Criticism of the White House’s leadership is also coming from within President Trump’s own Republican Party.
Pretti, a medical professional who cared for veterans, was shot in Minnesota this weekend by Border Patrol agents. It followed the shooting, also in Minnesota, of Renée Nicole Good earlier in January by Immigration and Customs Enforcement [ICE] agents.
Senate Democrats are refusing to support a bill—including funding for the Department of Homeland Security—until ICE is reformed. Senate Minority Leader Chuck Schumer said in a statement Saturday that the conflict in Minnesota is “appalling and unacceptable.” He added, “Because of Republicans’ refusal to stand up to President Trump, the DHS bill is woefully inadequate to rein in the abuses of ICE. I will vote no. Senate Democrats will not provide the votes to proceed to the appropriations bill if the DHS funding bill is included.”
Similar intentions were made clear by Democrats who, in last year’s shutdown, departed from party lines and voted to reopen the government in November. Nevada’s Jacky Rosen, for example, said in a statement yesterday: “The abuses of power we are seeing from ICE in Minneapolis and across the country are un-American and cannot be normalized. No one wants criminals in our country, but that’s not who this administration is going after…Enough is enough. We need to rein in ICE’s out of control conduct.
“As a member of the U.S. Senate, I have the responsibility to hold the Trump administration accountable when I see abuses of power—like we are seeing from ICE right now. That is why I’ll be voting against any government funding package that contains the bill that funds this agency, until we have guardrails in place to curtail these abuses of power and ensure more accountability and transparency.”
The deaths of both Pretti and Good have resulted in conflicting narratives from the Trump administration and local policymakers. The fatal shootings of both people have been described as self-defense by the Trump administration, with the Department of Homeland Security (DHS) posting on X on Saturday that an individual had approached an officer carrying a handgun, and “fearing for his life and the lives and safety of fellow officers, an agent fired defensive shots.”
Analysis of video footage showing the shooting of Pretti by the Associated Press concluded Pretti was not holding a gun during his interaction with the border agents. Minnesota Gov. Tim Walz has blasted DHS’s rhetoric as “nonsense and lies.”
In a column for the New York Times, Minneapolis Mayor Jacob Frey wrote of Good’s killing: “I’ve watched multiple videos, from multiple perspectives—it seems clear that Ms. Good, a mother of three, was trying to leave the scene, not attack an agent.”
Politics and sentiment
There is also an option to take the shutdown off the table entirely. Chris Murphy, the Democratic senator from Connecticut, highlighted that a government shutdown could “easily” be avoided if President Trump chose to remove the contentious DHS funding and have a stand-alone debate on ICE reforms. He posted on X: “It’s up to him if he wants to shut down multiple agencies.”
President Trump has so far retained his robust rhetoric when it comes to shutdowns. While inconvenient, these impasses often do not have a sustained negative impact on the nation’s economy: GDP bounces back relatively quickly once federal offices reopen. (Last year’s shutdown did have an impact on states that are home to major federal operations, such as Maryland and Virginia, observed Moody’s Mark Zandi.)
UBS’s Paul Donovan noted to clients this morning that the risks of a partial government shutdown would be less disruptive than a year ago, and added odds are rising because, on top of heated debate over ICE reforms, “the House is also in recess, and snowfall has closed the Senate until at least Wednesday.”
