Why one fintech CEO is watching furloughed federal workers

Hello FinTech Forward readers,

This week we dive into an intriguing intersection of macro policy, consumer behaviour and fintech strategy: the longest-ever U.S. federal government shutdown, and how it’s rippling through the consumer finance space—driven in no small part by remarks from Max Levchin, CEO of Affirm Holdings, Inc..

1. The backdrop: a record-breaking shutdown

Since October 1, the U.S. federal government has entered its longest funding lapse in history, halting work across many agencies and affecting hundreds of thousands of employees. According to the Bipartisan Policy Center, roughly 670,000 federal employees have been furloughed and another ~730,000 working without pay.

Beyond the payroll pause, this also affects broader programs, such as the SNAP food-benefit program that serves millions.
From a fintech vantage point, this kind of disruption matters: when incomes and program payments freeze, consumer spending and credit behaviour can shift—often subtly at first, but with potential larger consequences down the road.

2. Affirm’s stand-out quarter, and what Levchin is watching

Affirm reported a strong fiscal first-quarter: earnings of 23 cents/share on revenue of $933 million, outperforming expectations. Gross merchandise volume (GMV) jumped 42% year-on-year to $10.8 billion (vs. ~$7.6 billion a year prior).

Active consumers rose to 24.1 million (up from 19.5 m a year ago). The company also extended its partnership with Amazon through 2031, and it continues to ink deals with other major merchants.
Levchin emphasised that consumer credit performance remains sound, and so far the impact of the shutdown on Affirm’s customers appears minimal. “Right now, things are just fine,” he told CNBC. “We’re not seeing any major disturbances at all.”

However—and this is key—he flagged a very subtle loss of interest in shopping among federal employee borrowers: “We are seeing a very subtle loss of interest in shopping just for that group, and a couple of basis points.”

So: strong overall growth, but an early footnote of potential consumer shift among a specific cohort.

3. Why this matters: the signals and the risks

a) Early warning sign vs. material impact. While Affirm isn’t yet seeing major credit stress or high delinquency rates, the “subtle loss of interest” indicates that even when credit remains intact, spending patterns may shift—especially among people under financial strain (e.g., furloughed workers). That’s important.
b) BNPL business model sensitivity. The “buy now, pay later” (BNPL) model relies on consistent consumer purchasing, merchant adoption and healthy repayment behaviour. If a subset of shoppers reduce their discretionary purchases or switch behaviour, the growth engine could slow.
c) Segment differences. The remark focuses on federal workers—a defined, visible group. What happens if this behaviour trickles into other segments (e.g., hourly workers, gig economy)? Keeping a close eye on segmentation is critical.
d) Macroeconomic & policy interplay. A government shutdown is extreme, but other pressures (inflation, interest rates, cost of living) can trigger similar behaviour changes. That the CFO/CEO is flagging this publicly suggests he sees it as meaningful.
e) Strategic implications for fintechs. Firms like Affirm will need to watch for: delayed repayments, smaller average purchases, slower growth in new accounts, or shifts in merchant mix. They may need to adjust underwriting, pricing or merchant partnerships proactively—as Levchin noted they are capable of doing.

Best Price, Every Trade.

Want the best price on every swap? CoW Swap evaluates routes across DEXs in real time and settles the most efficient path. Tighter pricing, higher success rates, fewer reverts. Find your best price.

4. Why Affirm may be better positioned than some peers

Despite the caveats above, Affirm’s recent performance gives reasons for optimism:

• Its merchant network is expanding and diversified.

• It reported strong GMV growth (~42 %) and rising active consumers.

• Levchin highlights the company’s “network effects” as each transaction feeds back into underwriting, fraud detection and data models.

• The firm emphasises disciplined underwriting rather than relying purely on volume. (Levchin has cautioned in earlier interviews against overly loose underwriting as a cost of scaling.)
  So while the early signal of reduced shopping among one cohort is worth noting, Affirm’s fundamentals appear resilient—at least for now.

5. What to watch next

Here are key metrics and signals I’ll be monitoring (and you should too) for implications across fintech and BNPL:

• Segmented purchase behaviour: Are federal workers just one group or the first of more? Are other consumer groups showing reduced interest in shopping or shifting patterns?

• Delinquencies and repayment performance: Will any slowdown in purchase behaviour translate into higher repayments, lower volumes, or both?

• Merchant mix changes: Are merchants in high-discretionary sectors (travel, ticketing, apparel) more affected vs. necessities? Affirm noted strength in travel/ticketing.

• Average order value (AOV): If consumers reduce the size of purchases rather than stop altogether, AOV will fall even before volume drops.

• Credit standards and provisioning: How will fintechs respond—tightening credit, shifting risk appetite, altering marketing to new vs. repeat customers?

• Macro policy & labour outcomes: When the shutdown ends (or if relief packages flow), will there be a rebound? Is there pent-up demand, or has behaviour changed more structurally?

6. Final take

For fintech watchers, the headline numbers from Affirm are encouraging: strong growth, expanding activation, rising merchant footprint. But the sub-headline—that even a large BNPL player is seeing early signs of diminished shopping interest among a key cohort—serves as a warning. The crisis here isn’t yet visible in bad debts or defaults. It’s instead in behaviour: the subtle pause of “shopping just because” when income streams become uncertain.

In the end, fintech firms operate at the intersection of consumer psychology, credit risk and merchant economics. When the external environment—a government shutdown, a labour market disruption, inflation shock—shifts one node in that network, ripple effects can emerge. The resilience of a business like Affirm may buy time, but vigilance wins the day.

As always, I’ll keep an eye on how this evolves—and what it signals for the BNPL space, consumer credit, and fintech strategy more broadly.

Until next time, stay curious and ahead of the curve.