Often quoted in major national media, Adam is a Chartered Financial Analyst (CFA®), a CERTIFIED FINANCIAL PLANNER™ (CFP®), and has been included on the Forbes NextGen Best-in-State Wealth Advisors 2019 list. He is a member of the CFA Society of Los Angeles and the CFA Institute. Adam helps establish asset allocation strategy as a member of the EP Wealth Investment Committee, which supports all EP Wealth Advisors and their clients. The Committee’s top-down approach to portfolio construction begins with an outlook on the economy’s likely direction, followed by the implications for different economic sectors and asset classes. This culminates in strategic selection of the individual stocks, bonds, mutual funds or other investments deemed most appropriate for each individual client’s portfolio.
Market Update: Government Shutdown: What It Means for Markets and the Economy
September 29, 2025
As the deadline for a potential government shutdown approaches, concerns are rising about the impact on both the economy and financial markets. While the political stalemate between Democrats and Republicans could push the government into shutdown mode, history offers some perspective.
Market Resilience During Shutdowns
Despite the uncertainty that typically surrounds these events, markets have generally held up well during past shutdowns. The longest shutdown on record, spanning December 2018 through January 2019, lasted 34 days. During that period, markets not only remained stable but actually rallied. Although shutdowns are disruptive, they have not historically triggered widespread market selloffs.
Impact on Government Workers
The most immediate effect falls on government employees. Roughly 40%—around 900,000 workers—could face furloughs, while others may experience delayed paychecks. Historically, those affected have received back pay once the government reopens, but the short-term dip in spending can cause temporary weakness in economic growth.
Entitlement Payments Continue
For individuals relying on Social Security, Medicare, and other entitlement programs, there is reassurance: these payments fall under mandatory spending provisions and will continue uninterrupted, even during a shutdown.
Data Disruptions
Perhaps the biggest economic consequence of a shutdown is the interruption of federal data releases. If the government shuts down this week, critical information such as weekly jobless claims and the monthly jobs report from the Bureau of Labor Statistics could be delayed. This comes at a pivotal time, as the labor market shows signs of softening but not outright recession. Current estimates for September’s job growth range widely, from flat to 120,000 jobs added. Without timely reports, it becomes harder for analysts and policymakers—especially the Federal Reserve—to gauge the health of the labor market.
Private-sector data sources, such as the Job Openings and Labor Turnover Survey (JOLTS), will still be available. However, these are less timely and do not provide the full picture that government data typically offers.
Short-Term Pain, Long-Term Recovery
Shutdowns can cause short-term disruption and hardship, but they tend to have limited long-term effects. Once workers receive back pay and government operations resume, consumer spending usually rebounds.
In the broader context, a shutdown is just one more challenge in today’s already complex economic environment. If history is any guide, while the situation may be frustrating and politically charged, markets are likely to look beyond it.
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Video Summary:
On my flight to Boston last week, I had the opportunity to watch a few episodes of one of my favorite TV shows, that's The West Wing, and came across a line in there from Leo McGarry, who serves as the president's chief of staff in this TV show. And he says this line, which I think was just so timely. He says, there are two things in the world.
You never want to let people see how you make 'em, laws and sausages. And right now we're on the verge of the government shutdown. The odds are about 60%. The government will shut down if the Democrats and Republicans can't come to some sort of an agreement. Before tomorrow, Tuesday, at midnight.
They are meeting later on this afternoon. We'll see what happens there, but. I'd say most are expecting us to actually shut down here in a couple of days, which is certainly unfortunate, but it's nothing new. In fact, we've seen 14 government shutdowns since 1980. So this is just something that, unfortunately, we've had to deal with over and over again.
What does this mean for the market? You know, I think a lot of people would be surprised. To see that the market, at least in these more recent government shutdowns, actually does not sell off. You would think the market doesn't like uncertainty. We certainly don't need this right now with everything else that's going on.
But the market has actually held up relatively well in recent government shutdowns. In fact, the longest in history was the, was most recent government shutdown, which began in December of 2018. It bled into January of 2019. It lasted a full 34 days, and we saw the market actually rally quite a bit throughout that time.
So from a market standpoint, yeah, it's not ideal, but we also are going to look through it. I think there are a number of questions out there for those who are thinking about what the government shutdown means for the economy, for the markets, for them, the one thing I will highlight is that entitlement payments, things like social security, Medicare, those continue to be paid.
Those are mandatory spending provisions. And so whether the government shuts down or not. Don't worry, those will still get paid. I think it's really government workers that really suffer the most. Here we're going to see about 40% of government workers, so about 900,000 that could be furloughed during this time.
Then those who aren't furloughed might not get their paychecks in time. What we've seen historically is that they do eventually get paid, and so maybe there is a little bit of a dip in spending, a dip in economic growth here over the short term to the extent that this government shutdown lasts.
But eventually, as people get paid, they go back and get back to spending and doing what they do best. So we'll look, we'll look through that. Certainly, we hope that if there is a government shutdown, it will be short-lived, but of course, nobody knows. For now, what we are looking at is the fact that this is a really busy week for economic data.
We always look forward to the first week of any new month, and we know that right now, one of the big questions on our minds, and the minds of those at the Federal Reserve, is what's going on with the job market. We are seeing some notable weakness. Certainly, nothing to suggest that a recession is coming, but we're seeing a weakness in softening in the labor markets, and this is a really big week if the government is shut down.
Then we actually won't receive public data. Public economic data. And this week, what's in store is a weekly series that we get every Thursday from the Department of Labor, and that's the jobless claims. So those filing for first-time unemployment benefits and those filing for continuing benefits.
So we wouldn't get that on Thursday. Probably more importantly, is the fact that we would not get the jobs report that is due out on Friday, which comes from the Bureau of Labor Statistics. Right now, the big question is what's going on with the jobs market? We've seen a notable drop here in monthly hiring, and in fact.
Estimates vary coming into this jobs report, which is going to be for the month of September. We're seeing estimates from basically flat to 120,000 jobs being added in the month of September. So really it's, and nobody really knows, and it certainly won't help matter if we don't get this report on Friday as scheduled.
It might take some time. Be delayed by a week or two. Um, if we do see the government shut down even for a little bit. So it just makes things a little bit harder for all of us who are looking for signs of what's going on with the economy. Now, fortunately, we will still get other data. Private data will still come out as scheduled, so we'll get the jolts data this week.
That's the job openings and labor turnover survey. It is not provided by the government. But it's also not as timely. So it's actually looking a couple of months back, so it doesn't give us the full picture. So that's really what it means for us. You know, chalk this up to more things that's on this environment, but I'm sure we'll get through it.
Just know that we're keeping an eye on things here. You know, I would imagine that if he had another run at it, Benjamin Franklin might change his line to say that there are actually three things that are guaranteed in life. Taxes and government shutdowns. We wouldn't be surprised if we got one here in a couple of days.
But we'll get through it. So I'll leave it there for now. I'll look forward to next week.