What Could A Government Shutdown Mean For Equities?

Although we consider it unlikely, the U.S. government could shut down later this month for the first time since 2013 if a must-pass spending bill does not clear Congress. Shutdowns have been rare the past two decades, but they happened quite often in the ‘70s and ‘80s. Per Ryan Detrick, Senior Market Strategist, “There has been slight underperformance on average during times of a shutdown, but recent history suggests markets look past Washington’s squabbling, regardless of the length of a shutdown.  The previous two shutdowns in 1995/1996 and 2013 did little to slow down those bull markets, despite each lasting more than two weeks.”

Two final things to consider:

  • The last two times a government shutdown happened when Republicans controlled both the House and Senate (as they do now), the market rose.
  • The previous 18 shutdowns started in September, October, November, or December. This could be the first shutdown in any other month, making an April shutdown all the more interesting.

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