Implications of a Government Shutdown
By Argent Wealth Management, LLC on September 28, 2023
S&P 500 Around Shutdowns
Key Points
- Since 1976, the government has allowed funding to lapse on 21 separate occasions.
- Shutdowns have ranged from 1-35 days and lasted an average of 9 days.
- The S&P 500 tends to dip around shutdowns but recovers swiftly after funding is approved.
- When a shutdown lasted more than 9 days, S&P fell an average of .7% a month after
funding lapsed, then gained an average of 2.8% three months later after funding was
approved. - The reason the market tends to be resilient is that a shutdown subtracts just .1ppt per
week from GDP.- A shutdown of 1-35 days does not change the trajectory of the economy, and thus a
shutdown alone does not change the trajectory of the stock market.
- A shutdown of 1-35 days does not change the trajectory of the economy, and thus a
- Given the history of government shutdowns, it seems unwise to make long-term, or even
short-term investment decisions based on the prospects of a temporary government
shutdown. - Stay invested in your long-term plan and take advantage of opportunities that are created
by volatility
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