History of US Government Shutdowns

Here we go again as a divided Congress heads for another government shutdown. History has shown the impact on markets tends to be limited and short-lived but if there is a shutdown it comes at a time where negative forces are weighing on markets.

Rising Interest Rates

Higher oil prices

Tighter financial conditions

Strong dollar

Global economic growth concerns

Weaker stocks

Global Crisis ( wars in Ukraine and Middle East )

Government shutdowns in the United States occur when the government is unable to pass a budget or a continuing resolution to fund its operations. These shutdowns result in the temporary closure of various government agencies and services, impacting federal employees and government operations. Here is an overview of some significant government shutdowns in U.S. history:

1. 1980: During the Carter Administration, a government shutdown occurred as a result of a budgetary standoff between President Jimmy Carter and the Democratic-controlled Congress. It lasted a total of 8 days, from September 30 to October 18.
2. 1981: A brief government shutdown occurred during the Reagan Administration in November. It lasted for just a few hours.
3. 1984: Another brief shutdown took place in October 1984 during the Reagan Administration. It lasted for just one day.
4. 1986: A government shutdown occurred for one day in October 1986 during the Reagan Administration.
5. 1990: Under President George H.W. Bush, a government shutdown occurred due to disagreements over spending and deficit reduction. It lasted three days, from October 5 to October 9.
6. 1995-1996: The most notable and lengthy government shutdown in U.S. history took place during the Clinton Administration. It was actually two separate shutdowns:
   • The first shutdown, from November 14 to November 19, 1995, lasted 5 days.
   • The second and more extended shutdown, from December 16, 1995, to January 6, 1996, lasted 21 days, making it the longest government shutdown in history.
7. 2013: During the Obama Administration, a government shutdown occurred from October 1 to October 16, 2013. It lasted for 16 days and was primarily driven by political disputes over the Affordable Care Act (Obamacare).
8. 2018-2019: The most recent government shutdown happened during the Trump Administration. It began on December 22, 2018, and lasted for 35 days, making it the longest in history at that time. It was related to disagreements over funding for a border wall between the U.S. and Mexico.

Government shutdowns are disruptive to government operations, federal employees, and the economy. They often result from political gridlock and disagreements over budgetary matters and policy priorities. To prevent future shutdowns, Congress and the President must reach agreements on funding the government through appropriations bills or continuing resolutions.