U.S. Government Shutdown: Political Uncertainty, Market Resilience
The U.S. government shutdown is once again testing market patience amid stalled negotiations and disagreements over public spending. Unlike previous shutdowns, this time there is talk of permanent layoffs instead of temporary furloughs, which could have a stronger impact on employment and domestic consumption. However, historical evidence suggests that such events tend to have a limited effect on financial asset performance over the medium and long term. The main market drivers remain fundamentals: inflation, interest rates, earnings, and employment.
Key Data:
- Average government shutdown duration: 9 days
- Longest shutdown: 34 days (2018–2019)
- Potential permanent layoffs could have longer-lasting effects
The key is to stay focused, avoid hasty decisions, and rely on diversification as protection against political noise.
Source: Capital Group
