With another government shutdown looking increasingly likely, some consternation among investors is certainly understandable. However, as history has demonstrated, the market has learned to look through the headlines. As Goldman Sachs suggests, a shutdown should not have a significant impact on the market because the fiscal effect would be small – benefits, interest payments, and tax collection would all continue, the length of the shutdown is likely to be brief, and there are no current debt ceiling issues involved. As Carson Group shows below, the government has shut down 22 times for a median of 4 days, but importantly, equities have typically risen over both the near-term and long-term horizon. Deutsche Bank suggests there is a similar dynamic with the fixed income market. The takeaway is that despite dysfunction in Washington, investor focus has already moved on.
September 30, 2025
With another government shutdown looking increasingly likely, some consternation among investors is certainly understandable. However, as history has demonstrated, the market has learned to look through the headlines. As Goldman Sachs suggests, a shutdown should not have a significant impact on the market because the fiscal effect would be small – benefits, interest payments, and tax collection would all continue, the length of the shutdown is likely to be brief, and there are no current debt ceiling issues involved. As Carson Group shows below, the government has shut down 22 times for a median of 4 days, but importantly, equities have typically risen over both the near-term and long-term horizon. Deutsche Bank suggests there is a similar dynamic with the fixed income market. The takeaway is that despite dysfunction in Washington, investor focus has already moved on.