This blog is not the right venue for a political commentary; we generally address political issues only so far as their impact on economic issues and the investment landscape. While the government shutdown will measurably stifle GDP growth (initial estimates are in the 0.6% - 1.0% range), that only measures losses stemming from direct payments to government employees. It doesn’t measure secondary factors like psychology or consumer behavior. For example – imagine leisure travelers wanting to plan a vacation sometime over the next few weeks or months. These travelers may be dissuaded from planning travel given the fears about airline safety (and timeliness) if we get another shutdown in the near future. How much job loyalty will the impacted workers and contractors feel right now? Some of them may be trying to switch career tracks into a more stable employment environment.
We may or may not get another shutdown. The President has allowed Congress 3 weeks to come up with an acceptable solution. The problem is that the five-week government shutdown ended without any capitulation. Neither the democrats nor the anti-immigration stalwarts had their minds change over the high stakes brinksmanship and the political incentives didn’t change much either. All that has changed is that Americans now have a better sense of which semi-essential government losses become a bridge too far; in other words, Americans can stand national parks being closed to visitors, but airline travel and food safety risk is intolerable.
In short, we’re getting a three-week reprieve but the impact of the shutdown cannot yet be fully measured because the threats have yet to stop. I’d like to believe it’s possible for thoughtful, sober representatives to lead the way and create bipartisan, evidence-based solutions on issues like port-of-entry security and trafficking. I would not gamble on that outcome; I would not bet on this ending well. The President has already signaled that he is not optimistic about any plan coming out of Congress, so we could get another shutdown or merely a contentious national emergency declaration instead.