Government Shutdown Coming

The imminent federal government shutdown is less than 24 hours away and it will have a catastrophic impact on the stock market in the last quarter of this year.

Government shutdowns do not normally have a direct impact on the stock market as the eventual re-opening of the government is always factored in.

Why would this government shutdown be different? and why would this have an impact on the Stock Market? 1 Answer:

Labor Market and Increasing Unemployment

Unemployment is already growing. Federal employees have already been laid off in droves earlier in the year. This government shutdown will have further impact to Federal employees, many of whom reside in the Washington, DC and the larger Virginia area.

Combine the Government shutdown with the growing consumer pricing as a result of the tariffs, the recipe produces a very grim 4th quarter.

The lack of spending and increasing unemployment is occuring at the worst time of the year: Holiday season when the global retail market is expecting spending to increase.

The trends in the recent unemployment statistics have a direct correlation to the trends we experienced in 2008.