Government Shutdown Odds Hit 75%: What Happened To Markets During 2018-2019 Shutdown?

Government Shutdown Overview - Major stock market indexes are trading near all-time highs but may decline due to a potential government shutdown as early as next week [1] - The deadline for a potential government shutdown is October 1, contingent on Congress reaching an agreement on a funding bill or temporary extension [2] Political Dynamics - Senator Majority Leader Chuck Schumer attributes any government shutdown to President Trump, labeling the situation as the "Donald Trump shutdown" [3] - House Minority Leader Hakeem Jeffries indicates that Democrats would support a bipartisan spending plan that protects healthcare [3] - Trump is blaming the Democratic Party and may use the impending shutdown as political leverage [3] Economic Implications - The White House warns that a government shutdown could lead to mass layoffs, furloughs, and termination of federal employees [4] - Prediction markets indicate a 65% chance of a government shutdown occurring on October 1, with a 75% likelihood of a shutdown happening this year [5] - Forecasts suggest an average shutdown duration of 5.2 days [5] Historical Context - The last major government shutdown lasted 35 days from December 22, 2018, to January 25, 2019, primarily due to funding disagreements for a border wall [6] - During the last shutdown, approximately 800,000 workers went unpaid, and the GDP experienced a decline of about $3 billion [8] Market Reactions - The SPDR S&P 500 ETF Trust closed at $240.70 before the last shutdown and opened at $239.04 on December 24, 2018, reflecting a 2.6% drop [9] - Despite initial volatility, the ETF eventually rose, closing at $265.78 on January 25, 2019, marking a 10.4% increase from the pre-shutdown closing price [9] - The year 2019 saw the SPDR S&P 500 ETF Trust increase by 31.2%, indicating that the previous shutdown had a minor impact on the market in the long term [10]