GOVERNMENT SHUTDOWN- What can this mean for you?

According to many, a government shutdown is highly likely on Wednesday October 1st without further congressional action. Democratic leaders in Congress are seeking an extension of expiring health insurance subsidies, wanting to meet with President Trump and other Republicans, who canceled an initial meeting last week. President Trump believes that a shutdown will occur unless the Democrats back down from their demands. 

The implications of a government shutdown include large layoffs of federal workers. The Office  of Management has already sent a memo to agencies to consider reductions for employees whose programs won’t be funded during a shutdown.

In a shutdown, the federal government will stop all non-essential functions until more funding is approved by Congress and signed into law. Essential employees have to continue their work, but they do not get paid until funding is restored to their particular agency. 

Stock Market Changes

According to Chief Technical Strategist Adam Turnquist, some stocks have done well after government shutdowns, and there might not be a large sell off after this news. Stock market weakness usually precedes the actual shutdown, due to the high uncertainty and risk before the event occurs. According to data, the S&P 500 feel the week before four of the last five shutdowns, including 5% and 7% in 2018-2019.

In conclusion, markets early this week could be more volatile than usual, especially if shutdowns might cause a delay in economic data like Friday’s jobs report.

In times of high uncertainty, the best course of action is to stay up-to-date on current news and hold steady in your investments!