Government Shutdown: How to Navigate the Market and Manage Your Portfolio

Financial Planning

How to manage your portfolio during a government shutdown.

The government is now in a partial shutdown after Senate Democrats chose not to support the stopgap funding bill, which temporarily funds the government at current levels until the 21st of November. Their grievance is that the bill doesn’t include extending Affordable Care Act subsidies that are set to expire at the end of 2025.ᶦ

This is the first government shutdown since December 2018.ᶦᶦ According to Vanguard, the longest shutdown occurred from Dec. 21, 2018, to Jan. 25, 2019, which lasted 35 days. Here are some ideas to help you manage your finances in the event of a government shutdown:

Managing your portfolio during a government shutdown

Don’t try to time the market: It is very risky to try and predict how the market will react to a short-term political event. Investors should maintain a long-term focus and try not to focus on the fluctuations that may occur.
Remain diversified: It is critical to remain diversified with your investment strategy and not panic and make changes to your portfolio based on short-term political events.ᶦᶦᶦ
Be careful with government-dependent stocks: Stocks that rely on government-driven business could be volatile and risky.ᶦᵛ
Keep a long-term focus: Stay focused on the long-term and don’t get caught up in the short-term trading behavior that comes with short-lived market volatility.
Have a cash cushion: Having liquid cash assets in a money market or high-yield savings account can help to relieve some of the stress brought on by market volatility that comes with a government shutdown.ᵛ

Key points to keep in mind

Data might be delayed: Key government reports, such as the jobs report, might be delayed.ᵛᶦ
A government shutdown is not a debt-ceiling crisis: It is critical to be aware that a government shutdown is not the same as a debt-ceiling crisis, which is worse, as it could lead to a debt default for the U.S.ᵛᶦᶦ

The impact on industries and investments

Government contractors and airlines: Government contractors may face delays in modifications to contracts or payments. Airlines face increased delays and cancellations if staff refuse to work because they won’t get paid.ᵛᶦᶦᶦ
Financial regulators: Some financial regulators, such as the Securities and Exchange Commission (SEC) may be forced to operate with a reduced staff, slowing down or halting most activities. Filings from investment companies on the EDGAR system will be delayed, though they will still accept registration statements, offering statements, and other filings.ᶦˣ
Stocks: There may be short-term volatility.ˣ
Tourism and travel industry: Shortages at the TSA and air traffic control may cause issues and lead to longer lines and flight delays. National Museums and Parks may close, which could impact local tourism economies.ˣᶦ
Federal loans: Small business loans and other federal loan approvals, including some mortgages, may get delayed.ˣᶦᶦ

Consider scheduling a meeting with your financial professional

During uncertain times, consider scheduling a meeting with your financial professional to discuss any concerns you may have, or any modifications they could recommend that you wouldn’t have thought about. Making quick and uninformed decisions now, in a panic, could impact you years down the road.

_{Important Disclosures:}

_{Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.}

_{Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.}

_{All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.}

_{This article was prepared by LPL Marketing Solutions}

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_Sources:

_{[i] Everything you need to know about the US government shutdown}

_{[ii] Why the US government has shut down and what happens now}

_{[iii] Staying the course during a government shutdown | Vanguard}

_{[iv] The U.S. Government Just Shut Down: Here's What It Means for the Economy and Stocks}

_{[v] Government Shutdowns | Edward Jones}

_{[vi] Government shutdown 2025: Live updates, news and analysis}

_{[vii] What’s the difference between a government shutdown and a failure to raise the debt ceiling? | Brookings}

_{[viii] The U.S. federal government just shut down. Here's what it means for you and your money. | Morningstar}

_{[ix] SEC.gov | Division of Corporation Finance Actions In Advance of a Potential Government Shutdown}

_{[x] How a U.S. government shutdown could impact global markets}

_{[xi] Economic cost of the U.S. government shutdown: US government enters shutdown - here's what it could cost you starting day one - The Economic Times}

_{[xii] What a Government Shutdown Means for SBA Loans - NerdWallet}