The US Government Might Be Shutting Down Again

The US Government Might Be Shutting Down Again
Paul Allison, CFA

2 months ago1 min

What’s going on here?

Yet another potential US government shutdown looms, unless, that is, lawmakers can pass some sort of funding bill before the September 30th deadline.

What does this mean?

The non-essential parts of the US government could stop operating next weekend. And if you’d time-traveled here from some earlier point in history, you’d probably be fairly shocked at how blasé people and markets are to this fact. It used to be the threat of hundreds of thousands of federal workers being sent home without pay would rattle markets to their core. But, let’s face it, we’ve been here before, and a deal is likely to be struck either just before or just after that increasingly meaningless, fateful deadline. Congress has made this kind of end-of-the-world brinkmanship its brand, after all.

US government shutdown cost

Why should I care?

For markets: Curtain-raiser for a bigger show.

So this week’s tussle will come and go, but there’ll be much more political wrangling and mudslinging in the months to come, ahead of the 2024 vote. And while experienced investors know to ignore shutdown spats, big election dramas can still put the whole market on edge.

The bigger picture: Debtie Downer.

The funding bill is about more than just debt levels, of course, but often the debate comes back to that whopping $30-odd trillion debt pile. As of August, 15% of federal spending was going to interest repayments alone. And with sky-high interest rates, and politicians struggling to agree on any book-balancing tactics, that percentage is only going one way.

US national debt
Source: Statista


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