What Does the Government Shutdown Mean for Investors?

Aron Szapiro

The partial shutdown of the federal government has stretched into its second week, and right now there are few signs of compromise. At the same time, major financial market indexes have bounced up and (mostly) down, partly because of the shutdown, among other factors. What lessons should investors take from the shutdown, and how might it affect their investing strategy?

Shutdowns should not directly affect most investors or their investments, although these appropriations lapses ultimately cost the government money, and economists agree that they slightly reduce gross domestic product growth, particularly during longer shutdowns. Still, shutdowns provide an important piece of information: They are indicators of the extent of the gridlock between lawmakers.