Despite the threat of an imminent government shutdown, the stock market did not display signs of jitters on the day before the shutdown began. Stock market futures were down before the market opened on October 1, 2025, following the start of the shutdown.
On September 30, 2025, the Dow Jones Industrial Average rose 0.2%, marking a new closing record. The S&P 500 (the index on which the TSP’s C Fund is based) rose 0.4%, and the Nasdaq Composite added 0.3%. The gains were modest, but at this point, there is no immediate apparent panic from stock market investors.
Jitters are likely to appear among stock investors as new headlines are published speculating on the potential impact of a government shutdown. Politics is heavily intertwined in the shutdown scenario, and both parties are seeking an electoral advantage from the event.
TSP Performance of Core Stock Funds
2025 has been a good year for the Thrift Savings Plan. As is usually the case, when stock prices are rising, the TSP stock funds provide the best returns for TSP investors.
| Fund | September Return | YTD Return | 12-Month Return |
| C | 3.65% | 14.80% | 17.55% |
| S | 2.04% | 11.18% | 16.41% |
| I | 3.16% | 25.34% | 15.48% |
| G | 0.35% | 3.34% | 4.44% |
While 2025 has been a stressful year for the federal workforce, the TSP’s performance has been a bright spot for the millions of TSP investors—especially for those who have invested in the TSP stock funds.
Of particular note is the impressive year-to-date performance of the I Fund. The I Fund is often trailing the other stock funds but 2025 has been a banner year for this fund.
A New Approach to a Government Shutdown
This is the third time during President Trump’s two presidential terms that the government has shut down. This time, he has threatened to remove federal employees who are sent home rather than rehire them with back pay later.
The White House estimates Democrats’ full “wish list” at around $1.5 trillion in new or restored spending, including claims of demands for “healthcare for illegal aliens” and funding for public broadcasting.
One of the shutdowns during the earlier Trump administration lasted 35 days and one lasted three days.
This year, Republicans advanced a “clean” continuing resolution (CR) to extend funding at current levels through November 21, 2025, without new policy changes. Senate Democrats blocked this measure, requiring 60 votes to overcome a filibuster.
How this new approach being taken by the administration will play out remains to be seen. While the shutdown was invented by the Carter administration, the Democrats may have walked into a situation this time around that provides Republicans with a new opportunity to reduce government spending and federal employment. If that is the outcome, there will likely be fewer government shutdowns in the future.
Before 1980, a federal government “shutdown” did not exist, even though there were instances when Congress had not appropriated funds for the government to continue operating.
Even when funds were not appropriated, government employees continued working, received their pay (which was usually delayed until the funds were approved), and the situation was resolved without the political drama.
Who invented the shutdown? Benjamin Civiletti. Civiletti was the attorney general under President Jimmy Carter. In a second legal opinion, he clarified his “either exists or it does not” rule. He concluded that the president has the constitutional “leeway to perform essential functions and make the government ‘workable’ ”. This is apparently the reason for essential and nonessential workers.
Presumably, the current US Attorney General could issue a different opinion that concludes the shutdown requirement, first “discovered” in 1980, was in error.
Potential Impact of This Shutdown
The approach being taken this time around is much different, and the stakes are higher.
It will affect as many as 750,000 federal employees, allowing the administration to permanently remove them and potentially slash associated programs, and reduce the national debt. It would also give the administration greater control over the federal workforce and federal spending.
There will, of course, be lawsuits to be resolved in the courts. Cases were quickly filed by federal unions (probably in liberal districts like Northern California, Massachusetts, Maryland or the District of Columbia) seeking a quick, favorable decision in district court. Based on past experience, appeals to higher-level courts will quickly follow.
That is not a quick resolution. If the issue reaches the US Supreme Court, a final decision could take months or even a year or more, with various injunctions and appeals along the way. The employees who are not receiving a regular paycheck will be under significant financial distress and the economic impact on the economy could be significant.
The political pressure on both parties will build quickly and will be more intense this time. The potential implications are also much higher. If shutdowns are a way to reduce the federal workforce, it may minimize future congressional brinkmanship. Congressional representatives would likely reach a compromise more quickly to avoid blame. The approach could also erode the bipartisan consensus that has been necessary.
The approach may alter how fiscal standoffs play out for generations. Overall, it transforms shutdowns from temporary pains into structural overhauls, with high risks of chaos if not reversed swiftly.
TSP Returns For September 2025, Year-to-Date, and 12-Months
| Fund | Price | Month-to-Date | Year-to-Date | 12-Month |
|---|---|---|---|---|
| G Fund | $19.3813 | 0.35% | 3.34% | 4.44% |
| F Fund | $20.6736 | 1.09% | 6.14% | 2.90% |
| C Fund | $106.6829 | 3.65% | 14.80% | 17.55% |
| S Fund | $100.2319 | 2.04% | 11.18% | 16.41% |
| I Fund | $52.5112 | 3.16% | 25.34% | 15.48% |
| L Income | $28.7454 | 1.18% | 7.50% | 7.85% |
| L 2030 | $56.6987 | 2.14% | 12.39% | 12.00% |
| L 2035 | $17.2250 | 2.32% | 13.29% | 12.71% |
| L 2040 | $65.9596 | 2.50% | 14.15% | 13.41% |
| L 2045 | $18.2309 | 2.64% | 14.89% | 14.01% |
| L 2050 | $40.3442 | 2.79% | 15.61% | 14.61% |
| L 2055 | $20.7295 | 3.24% | 17.90% | 16.77% |
| L 2060 | $20.7272 | 3.25% | 17.90% | 16.76% |
| L 2065 | $20.7248 | 3.25% | 17.90% | 16.76% |
| L 2070 | $12.2833 | 3.25% | 17.91% | 16.77% |
| L 2075 | $10.7295 | 3.25% | N/A | N/A |
TSP Millionaires
In March 2020, there were 27,212 TSP millionaires. This grew to 171,023 by June 2025—a growth of over 500% in the number of millionaires in just over five years.
As September 30 is the end of another quarter, and there has been another jump in the value of the TSP stock funds, the previous record number of millionaires may be surpassed. The number of TSP millionaires is currently at its highest point with the addition of the June 2025 numbers.
The average years of contributions for TSP millionaires have remained stable over the last five years, hovering around 28 years of average service so there is a strong correlation between long-term contributions and achieving millionaire status in the TSP.
What we do not know is how many of the longest-serving federal employees who were millionaires may have left federal service. With the turmoil surrounding the federal workforce so far in 2025 (and more turmoil still to come), the growing number of TSP millionaires may be stalled.
Summary
2025 is not yet over. It has been a stressful year, and the level of stress may go even higher before the year is over.
The TSP returns are a bright spot in government employment this year. Take your pleasure where you can as the amount in your TSP account has gone up in this record-setting year.
