{"id":13945,"date":"2025-10-01T17:01:34","date_gmt":"2025-10-01T17:01:34","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13945"},"modified":"2025-10-01T17:01:35","modified_gmt":"2025-10-01T17:01:35","slug":"how-the-government-shutdown-will-affect-the-economy-and-market","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/how-the-government-shutdown-will-affect-the-economy-and-market\/","title":{"rendered":"How The Government Shutdown Will Affect The Economy And Market"},"content":{"rendered":"\n

Government Shutdown Fears<\/strong><\/p>\n\n\n\n

Rachel T. from Seattle, WA asks:<\/em> Hi Mitch, I think it\u2019s pretty much a foregone conclusion that the government will shut down this week, and based on how things are going, it\u2019s not looking good for some deal to be made. I\u2019m worried about what that would mean for the economy and the stock market. Should investors be bracing for a big impact?<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

By the time readers see our exchange here, it may very well be the case that Congress hits the October 1 funding deadline without a continuing resolution. That would mean parts of the federal government would shut down.<\/p>\n\n\n\n

The implications can be far-reaching. As many as 900,000 federal workers could be furloughed, there would be delays in agency services, closed national parks, and postponed release of key economic data. For everyday life, I want to be clear that these delays and closures would not be trivial matters. But from an investor\u2019s standpoint, history suggests shutdowns are more noise than fundamental risk.<\/p>\n\n\n\n

Case-in-point: since 1976, there have been more than 20 shutdowns of varying lengths. None has ever caused a recession, and none has been the spark for a bear market.<\/p>\n\n\n\n

In fact, stocks have risen more often than not during shutdowns, and in the majority of cases, they were higher in the months immediately after. I offer readers a visual breakdown of the three most recent shutdowns, which took place in early 2018, late 2018\/2019, and October 2023. The longest shutdown on record, the 35-day episode in late 2018 into 2019, coincided with a strong equity rally as seen below.<\/p>\n\n\n\n

Markets May Swing \u2014 Here\u2019s How to Stay on Track<\/a><\/u><\/strong><\/p>\n\n\n\n

Government shutdowns and other Washington standoffs grab headlines but rarely trigger recessions or bear markets. The bigger danger is reacting to the noise and trying to time the market, a move that often hurts long-term returns.<\/p>\n\n\n\n

Our free guide,\u00a0\u201cThe Perils of Market Timing\u201d\u00a01<\/sup><\/a><\/span><\/em><\/strong>\u00a0shows why staying invested through uncertainty works better than jumping in and out. You\u2019ll learn:<\/p>\n\n\n\n