STOCK/MARKET Alert 2.26.2025 Government Shutdown

My Stock/Market Alert is an event driven brief about a stock OR the market when noteworthy action occurs. Today’s alert is about the federal government shutdown. After going into effect at midnight as the clock ticked to October 1st without an agreement on a stopgap bill, Government Shutdown 2025 is now in day 2.

Expect the frequency of my Stock/Market Alert notes to be consistent with meaningful moves in a specific stock held by BAM Portfolios or the stock market in general.

The 2025 U.S. federal government shutdown is in its second day today with no signs of an imminent resolution as Republicans and Democrats have traded accusations as they play the blame-game. As a promoter of proper perspective, I thought this event was worthy of a shot of perspective now. For starters, U.S. federal government shutdowns are more common than one may think. There have been 20 since 1976.

Perhaps the biggest impacts of this government shutdown will be felt by federal workers and active-duty military service members who will not receive a paycheck during the government shutdown. The Congressional Budget Office estimated earlier this week that roughly 750,000 federal employees would be furloughed each day of the shutdown. Certainly our federal government shutdown is not ideal, but historically these occurrences have not had a negative impact on investors who stay the course in the stock market. Here’s some facts:

Again, since 1976, there have been 20 Government shutdowns. The average duration of shutdowns has been 8 days, and half have lasted no longer than 3 days. While the threat of a government shutdown often makes headlines, the market tends to ignore the excitement. Stock performance during shutdowns has been mixed, ranging from a drop of 4.4% in October 1979 to a gain of 10.3% in the 2018-2019 shutdown. More importantly, our research shows that stocks have generally risen in the 12 months after a shutdown ends. The graph below offers good perspective…

Note the last shutdown that started in last 2018. It lasted 35 days, much longer than the average government shutdown duration. And yet, the SP 500 climbed over 10% higher. This underscores how historically the U.S. stock market has been resilient during government closures. In the face of day 1 of Government Shutdown 2025 the stock market displayed exactly that yesterday and again today.

Hope this is helpful. My intent in writing my Stock/Market Alert is to send you commentary on relevant and timely developments that may relate to your investment portfolio.

John