Shutdown #3 By: Gabriel PotterMBA, AIFA® 2018.12.18

In retrospect, it’s seems like a minor miracle that there was only one government shutdown during the 8-year Obama administration.  Despite the constant enmity and threats between Congress and the White House, there was only one federal government shutdown in 2013.  On the other hand, it did furlough nearly 1 million federal employees while delaying payment for another million or so.  The disruption of stability was palpable; the impact to the economy was measurable. 

In contrast, there have been two federal government shutdowns in 2018 alone.  To be fair, the impact of these early 2018 shutdowns – in January and February - have been marginal as their collective duration is best measured in hours, rather than days.  Also notable is the fact that both of these shutdowns came at a when both houses of Congress and the White House were unified under the Republican banner.  In 2019, when the House of Representatives is ceded to the Democratic Party, that won’t be the case.  It is reasonable to expect greater and more frequent clashes, between the White House and Congress.

Actually, it turns out we won’t have to wait long for another shutdown threat.  Today is December 18th.  The next theorized shutdown could occur on December 21st - 3 short days.  Moreover, if the politics reporters are to be believed, both sides are digging in their heels and willing to let this shutdown occur.

For now, I’m not going to bother challenging the actual political points of contention which sparked each of these shutdowns – the DACA proposals, the $5 Billion requested for a southern border wall, and so on.  Let us, instead, take a moment to realize that the next shutdown – which by most accounts seems likely – is going to occur during the all-important Christmas shopping season and may extended through Christmas itself.  (Fun fact:  the day *after* Christmas is also critical; it’s the 5th biggest shopping day of the year.)  For many industries (like jewelry), the holiday season can represent as much of 30% of their annual sales.  Forecasts for corporate health and revenue are deeply dependent on what occurs in the all-important month of December. 

The first two shutdowns of 2018 didn’t impact the economy much.  If we get a third shutdown this week it probably will.

 

 

 

 

Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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