We recently took a look at the implications of a government shutdown. Download a high resolution PDF with key takeaways.
Key Takeaways
- Since Inauguration Day, the Trump administration has focused on reducing the deficit through federal cost cutting measures and tariffs with the goal of not hindering economic growth.
- With spending under the microscope, the probability of a government shutdown had been elevated for several months. On Friday, March 14, Congress came to terms on a six-month funding bill to avert the government shutdown and Trump signed the bill just hours ahead of the midnight deadline.
- Since 1976, there have been 22 funding gaps and four times when the government fully shut down. Most recently, there was a full shutdown in 2013 that lasted 17 days and a partial shutdown in 2018/2019 that lasted 35 days.1
- In 2011, U.S. government debt was downgraded by S&P after a government standoff related to the debt ceiling. The S&P 500 experienced significant volatility the next week while government bond yields declined, meaning investors were moving into the safety of Treasuries, despite the downgrade.
- While a shutdown was avoided last week, government spending and the debt ceiling will likely continue to be at the forefront of policy discussions. These events have historically tended to create some short-term market volatility, though previous events have not resulted in longer-term concerns.
1. Carson Group “Ten Things to Know about a Government Shutdown; September 26, 2023; https://www.carsongroup.com/insights/blog/ten-things-to-know-about-a-government-shutdown/
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