Is the stock market affected by the government shutdown
Stocks are up today, even as the likelihood of a government shutdown seems to have climbed from no-way to probably. But maybe that the recent market climb is not that strange. In fact, if the shutdown were happen it could actually be a boost to the market. First of all, stocks have risen during past government shutdowns.
U.S. Federal Government Shutdown | OppenheimerFunds
The December January shutdown, for instance, did nothing to stop the then gaining momentum s bull market. And in the half year following that shutdown the market was up 1. Why would a government shutdown cause a rally? But one reason is that shutdowns do little to impact corporate profits. Paul Ashworth, chief US strategist of Capital Economics, predicts that a government shutdown of a similar length towhich included a 5-day shutdown in November and then a break in December and early January, would only lower GDP growth by about 0.
Some industries could be effected like defense contractors. But the government is likely to make all of those purchases when it restarts.
The rest of corporate America could see little impact, especially at a time when the stimulus has run its course and the economy is picking up. But a government shutdown could cause the Fed to put off raising rates for now. The Fed actually lowered rates in the wake of the shutdown in order to keep the economy on track.
This time, the Fed would likely delay raising rates after a shutdown to see if the government closure had slowed the economy is anyway.
Bert Ely, a banking consultant, says it looks like the government would keep open any functions that are essential to banks. The Federal Reserve has already said that it will remain open. Other regulators like the Federal Deposit Insurance Corp.
Markets Assess the Impact of a Federal Shutdown - The New York Times
So there would is the stock market affected by the government shutdown no need for them to shut down. And there crane forex bureau speke hotel is the stock market affected by the government shutdown talk for the past two years about whether the government would boost taxes or cut spending in order to reduce the budget deficit.
How the Government Shutdown Will Affect Your Investments
Or whether Washington would do anything to cut the deficit at all. It is possible that if a deal is brokered between the White House and Republicans, Wall Street could get a little more clarity on where the national debt debate is going. Lastly, strangely, a government shutdown could boost confidence in the economy. Early on in the recovery there was a lot of talk on how the bounce back was entirely because of the government.
With the government shut down, that would be a hard argument to make.
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