Putting people on edge might be good for corporations that are trying to squeeze more blood out of a thinly staffed workforce.

But much remains to be seen about how U.S. consumers are going to react to a flurry of federal hiring freezes, executive orders and, now a memo on a temporary payment pause for federal grants, loans and other assistance programs.

The pause was to go into place at 5 p.m. on Tuesday, according to a memo from the Office of Management and Budget that was sent to heads of federal executive departments and agencies.

No surprise, perhaps, but U.S. District Judge Loren AliKhan temporarily blocked the effort Tuesday afternoon. The block is to expire Monday but the judge could lift it before then. The suit, filed by nonprofits and advocacy groups, asked for a temporary restraining order in U.S. District Court in the District of Columbia to prevent the order scheduled for Tuesday afternoon.

It’s one thing to be uncertain if you’re trying to avoid the next round of layoffs at your company. Odds are you might work harder, pick up new skills that help you hold onto that paycheck, or start looking for a new job elsewhere.

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It’s another thing to be uncertain about what’s in store for the U.S. economy overall when the White House is hell-bent on mixing things up.

How will consumers react to all this new uncertainty?

Will consumers keep spending at a decent pace? Or will they say, "Hey, wait a minute here, I’m not sure what’s next?" It might depend right now on how you voted in November.

We’ve not seen a lot like this in the past, even during President Donald Trump’s first four-year term.

Consumers underwent an incredible amount of economic uncertainty, including job losses, during the COVID-19 pandemic that hit in early 2020. But the rapid-fire moves that Trump has made since Inauguration Day on Jan. 20 have put many heads on a swivel, particularly if you’re working in Washington or running a nonprofit that depends on federal money.

The OMB memo begins: "The American people elected Donald J. Trump to be President of the United States and gave him a mandate to increase the impact of every federal taxpayer dollar."

According to the memo, the federal government spent nearly $10 trillion in fiscal year 2024, and, of that amount, more than $3 trillion was federal financial assistance, such as grants and loans.

A footnote in the memo: "Nothing in this memo should be construed to impact Medicare or Social Security benefits."

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The memo stated that financial assistance should be dedicated to advancing administration priorities, including "eliminating the financial burden of inflation for citizens," and "ending 'wokeness.' "

The thinking is that Trump is out to get federal government spending in line with Trump’s executive orders, including Trump’s executive order banning diversity, equity and inclusion programs across the U.S. government.

The memo is 'not a law'

How bad might things get for the U.S. economy?

Patrick Anderson, CEO of the Anderson Economic Group consulting firm in East Lansing, took issue with reports that the funding freeze would trigger “trillions of dollars” of economic disruption. Anderson called such claims “overblown.”

“It’s not a law, and it’s not even an executive order. It’s an OMB memo, an important one, but not the budget of the United States government,” Anderson said.

The memo from the acting director of the Office of Management and Budget, Anderson said, will be interpreted in widely different ways.

“Colleges and universities and research programs are likely to be affected by some cancellations of awards or grants that were in the pipeline and were expected to be paid out over the next six months,” Anderson said.

Some nonprofit organizations and international agencies that had received U.S. government aid in the past likely won’t receive money in many cases, he said.

“President Trump has, to a remarkable degree, acted immediately and aggressively to do what he promised to do on the campaign trail,” Anderson said. That includes promises, he said, involving immigration; tariffs; diversity, equity and inclusion programs and electric vehicle mandates.

“None of these actions are completely fleshed out, and I expect every one of them will be adjusted, modified and implemented in ways that can't be known within 10 days of him taking office,” Anderson said.

Anderson said the U.S. economy is unlikely to be impacted in a significant way by the temporary pause as outlined in the memo.

“It does not overturn any federal law and would not stop the collection of taxes nor the payments of Social Security, Medicare, federal highway funds, military spending, homeland security and other necessary functions of the federal government,” Anderson said.

According to the memo, the federal agency reviews must be completed by Feb. 10. As a result, those organizations or groups hit by the pause will see at least two weeks of uncertainty and delay.

We're looking at 'a lot of unanswered questions'

Gabriel Ehrlich, director of the University of Michigan's Research Seminar in Quantitative Economics, said a lot of unanswered questions remain about what the memo means in practice.

"The memo is explicit that it does not apply to Social Security or Medicare benefits, and our initial read is that many of the other biggest dollar programs such as Medicaid, student loans, K-12 funding and transportation funding are unlikely to be affected as well," Ehrlich said.

The immediate impact on macroeconomic conditions for the U.S. economy will be limited if, as we expect, this pause is temporary, Ehrlich said.

"In terms of Michigan's economy, our major question is whether the memo will affect loans and grants for electric battery and vehicle plants. We do not know what the memo means for those funds," Ehrlich said.

The memo by the Office of Management and Budget is not all that's generating a great deal of questions about what's next, though.

And I wonder if the onslaught of uncertainty ends up resurrecting all the tension associated with an election that ended in November and ultimately drives some consumers to pull back their spending?

Or will enough consumers who voted for Trump and support his return to the White House be reinvigorated by all the quick action and be even more motivated to spend?

Last fall, we didn’t know who would win the election. Now at the start of 2025, we’re not sure how the economy will handle the rapid-fire change being rolled out of the White House.

Wall Street appeared to hardly notice Tuesday morning's buzz about the pause. The Dow Jones Industrial Average closed up 136.77 points or 0.31% shortly Tuesday, ending the trading day at 44,850.35 points.

For certain, we’re looking at legal battles ahead, more partisan divide, and what looks now like ongoing uncertainty.

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Michigan Attorney General intends to file litigation

Michigan Attorney General Dana Nessel said Tuesday that her office was investigating "what these orders mean and the extent of their immediate impacts."

The Michigan Democrat said she intended to file litigation to protect programs and restore services.

She said her office was working at requesting "an immediate legal remedy to restore funding provided by Congress, require this administration to comply with the law, and to stop this absurd and unprecedented attack on these programs."

The freeze is creating much confusion, and more problems will crop up if some programs need to close if they lose federal government money. Think of vulnerable households that might lose vital help.

Even so, it is possible that many middle income consumers will just keep on track, especially if their own jobs are not at risk.

But many other people will not be willing to make big-ticket, long-term purchases if they’re unsure what’s next in their community. Or what's next with their money.

Right before the start of tax season, for example, the White House initiated a hiring freeze at the Internal Revenue Service, which could be much longer than those hiring freezes facing other federal agencies.

On Saturday, Trump told a rally in Las Vegas that he is considering sending nearly 90,000 newly hired IRS agents to guard the Southern border. He also told the crowd that he could fire the IRS employees, many of whom had salaries funded under the Inflation Reduction Act.

Not exactly your usual kickoff for tax season.

Many consumers will benefit in the coming months from receiving their tax refunds, often the single largest check that some families see in the year. Those refund checks could buoy spending.

Consumer sentiment fell in January

On Jan. 24, the University of Michigan's Surveys of Consumers reported that consumer sentiment fell for the first time in six months, edging down 4% from December.

Sentiment declines were broad-based and seen across incomes, wealth and age groups.

Buying conditions for durables softened, such as cars, home appliances and the like, the U-M report noted.

Even so, buying conditions for durable goods remained about 30% stronger than six months ago amid persistent views that purchasing now would avoid future price increases.

January's data closed on Inauguration Day, and consumers of all political leanings will continue to refine their views as President Trump's policies are clarified and implemented, according to economist Joanne Hsu, director of the University of Michigan's Surveys of Consumers.

"Survey responses make clear that the recent partisan divergence in confidence in the economy is rooted in how consumers view Trump's proposed policies," she said in a statement.

"Some consumers believe that these policies, like tariffs, will slow inflation to a crawl. Others believe Trump's policies will lead inflation to roar back, and that buying now would help people avoid higher prices in the future,” Hsu said.

The strong spending data for vehicles and retail sales, she said, are “signs that consumers are indeed acting on those beliefs with their wallets."

When directly asked about tariffs, about 19% of consumers said they believe higher tariffs are better for the economy, according to the survey, while 62% favor lower tariffs for the economy. The remaining 19% believe that tariffs would make little difference to the economy.

Right now, many consumers are benefiting from wage gains. The U-M report noted that assessments of personal finances were buoyed by stronger incomes. However, consumers appear to be worried that labor markets may weaken in the year ahead.

Concerns about unemployment rose in January. About 47% of consumers expect unemployment to rise in the year ahead, according to the U-M survey, the highest since the pandemic recession.

We’ve had strong economic conditions for quite some time. Inflation has been cooling down, even as shoppers hate higher prices. The 401(k) accounts aren’t looking too mangy.

No one can say for certain whether the funding freeze could set off a deep freeze in the U.S. economy. After all, we're dealing with a lack of clarity on how the Office of Management and Budget memo will end up being used or interpreted.

Yet, after being hit by Washington’s wave of the unexpected, some people cannot help but wonder if one day January could be viewed as the month of calm before the storm. We just don’t know what we don’t know yet.

(This story has been updated to include new information).

Contact personal finance columnist Susan Tompor: [email protected]. Follow her on X @tompor.