1996 shutdown stock market
The predictions have come fast and furious. Economists surveyed by Bloomberg last week said a one-week shutdown would reduce fourth quarter GDP growth by. Macroeconomic Advisers, one of the most sober and best forecasters, said a two-week shutdown could shave. Neil Irwin at the Washington Post has helpfully aggregated a bunch of Wall Street forecasts that project that a one-month shutdown could reduce fourth-quarter growth by anywhere from.
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Market and economic analysts have looked back to the experience of and for guidance. The stock market actually rose during those two shutdowns. Paul Ashworth, chief U.
It is natural to look back and make comparisons. But investment professionals often note that past performance is no guarantee of future performance. Just as the economy of looked a hell of a lot different than the economy of , the economy of late looks a lot different than the U.
When you look back over the past 18 years, one of the unavoidable conclusions is that, for a variety of reasons, the federal government is much more involved in the economy than it was. As this chart shows , the federal government has become a larger part of the economy over time.
In , federal spending accounted for about 19 percent of GDP. Now, it accounts for about 22 percent of GDP.
Entitlements like Medicare and Social Security, which have yet to be affected, account for a big chunk of this rise. But the fact remains that federal government spending accounts for a significantly larger chunk of GDP than it did 18 years ago.
So if you slam the brakes on that spending, it will have a bigger direct impact than it did 18 years ago, for example in the effect the furloughs of defense contractors is having on the private sector.
Government Shutdown Is Averted, Last Minute Spending Bill Approved - TheStreet
Politico had a good piece Tuesday morning about how Charleston, South Carolina, which is represented by shutdown advocate Mark Sanford, is remarkably dependent on federal spending. That is to say, exports and imports—the volume of goods, people, and services moving in and out of the country—have risen far more rapidly than the economy as a whole.
Last year, trade accounted for In , it was It turns out that dozens of agencies are involved in the process of releasing shipments for import and export.
And many of them are closed or operating with fewer staff. Department of Commerce authorization to export. Steel imports are stranded at customs-clearance warehouses awaiting paperwork.
7 New Listings On The JSE For The Month Of October | AFKInsider
The trend of financialization—the fact that a larger number of people are involved in moving, trading, and managing money—has long been documented and lamented. In , the financial sector accounted for about six percent of GDP ; last year, it accounted for about eight percent.
Today, the Export-Import Bank is closed, and so is the Small Business Administration. The inability to get data on income from the IRS is hampering the ability to close mortgages, including jumbo loans, as Diana Olick of CNBC reports. Some of this activity may not have been taking place two or three years ago. All of which is to say that models constructed based on prior data and understanding of the economy may not be accurate measures of what is happening now and what will happen in the next few months.
When new, unprecedented things happen, models get thrown out the window. We learned that the hard way in and , when a subprime crisis morphed into a systemic crisis that brought global trade to a standstill. Drink and Food Eat.
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