Stocks Rise Despite High Shutdown Risk, But Experts Warn This Time May Differ
NEW YORK – U.S. stocks surged Friday even as the probability of a 2025 government shutdown climbed to over 80% according to predictions on the polymarket platform. Despite the heightened risk, historical data suggests government shutdowns typically have a limited impact on the stock market, a pattern some analysts beleive will repeat itself.
Historically, shutdowns haven’t significantly harmed the economy. As 1976, the S&P 500 has averaged no change during these periods, and even experienced a 10% increase during the shutdown that began in late 2018. this resilience stems from the nature of shutdowns, which frequently enough act as temporary delays rather than fundamental economic shocks. However, some market observers are suggesting the current political climate and economic factors could lead to a different outcome this time.
Market veterans generally view shutdowns as minor events. “Prior government shutdowns have had minimal lasting economic impact. They tend to mimic a hurricane or a snowstorm, delaying most activity and quickly making up for it upon reopening,” explained Keith Lerner, chief investment officer at truist Wealth, in a recent report.
Bob Elliott, chief investment officer at Unlimited Funds, echoed this sentiment in a Substack post, noting markets appear to be following a “same old playbook” where a shutdown won’t meaningfully affect the economy. However,he added a cautionary note: “Us macro folks are worriers by constitution,so take this with a grain of salt,” Elliott said,”but there seems to be a risk that this shutdown may be different than what we’ve come to expect.”
