Investing During a Government Shutdown

The U.S government shut down last week.

Republicans and Democrats couldn’t agree on a bill to fund the government.

A government shutdown sounds really bad… but it’s not as scary as it sounds.

Social Security checks are still going out.

And the mail will still be delivered.

The shutdown only impacts the federal government.

So local emergency services like the police and fire departments will continue to operate at 100%.

And despite the wishes of millions of students, schools will stay open as well.

So what actually happens during a shutdown?

NPR has a great article detailing what we should expect during the shutdown.

There are plenty of articles talking about the politics of the current shutdown.

But we’re going to skip the political discussion and focus on how the shutdown will impact the stock market and our investments.

The last major shutdown happened during Trump’s first term, in 2018.

The shutdown lasted over a month and is highlighted in yellow in the chart above.

It looks like the market crashed before the shutdown and then rebounded during it.

However, the cause for the crash wasn’t the shutdown but rather the Fed raising interest rates.

People thought the Fed raised rates too high, which would slow down our economy too much.

However, our economy remained strong and those fears turned out to be unfounded.

In 2013, the U.S. government shut down for over 2 weeks.

The stock market dropped and then rebounded while the shutdown was still going on.

What do these charts from 2018 and 2013 show us?

The charts show the stock market doesn’t care a whole lot about government shutdowns.

Just look at our current shutdown.

Granted, we’re only a few days into it.

But the S&P 500, the NASDAQ, and the Russell 2000 are still hitting all-time highs.

What should we do with our money?

Don’t panic and keep investing!

There is a lot of scary-sounding information coming out about the shutdown from the media.

It’s their job to scare us… it keeps us coming back for more!

But don’t get caught up in the fear and sell your favorite stocks.

History shows government shutdowns don’t impact the stock market very much.

The ride will probably be bumpy, but hold on tight.

How long do you think the shutdown will last?