So, What is likely to happen if the U.S. Government were to shut down? The last time the U.S. Government shutdown was in late 1995, and early 1996. The issue then was debate over the debt ceiling. Although there was persistent speculation in the press that the shutdown would lead to a recession, a recession never occurred. However, not everything sailed through the ’95-’96 shutdown unscathed. Economic statistics were affected in the mid-1990s with a collapse in Consumer Confidence of more than 10 points. Jobless claims surged from around 300K to more than 400K. The Dow Jones Industrial Average did decline 4.5% following its mid-December 1995 peak to its mid-January 1996 low on the softening economic figures. If a shutdown comes to pass this year, it is reasonable to expect similar reactions. Worsening of the economy, but no recession, a downturn in the stock market, and certainly more market volatility across all markets.
Economic Event | Period | Economic Survey | Actual Reported | Original Prior | Revised Prior |
S&P/CS 20 City MoM SA | Jul | 0.80% | 0.62% | 0.89% | 0.88% |
S&P/CS Composite-20 YoY | Jul | 12.40% | 12.39% | 12.07% | -- |
S&P/CaseShiller Home Price Index NSA | Jul | 162.69 | 162.49 | 159.54 | -- |
House Price Index MoM | Jul | 0.80% | 1.00% | 0.70% | -- |
Richmond Fed Manufact. Index | Sep | 12 | -- | 14 | -- |
Consumer Confidence Index | Sep | 79.9 | -- | 81.5 | -- |
John Broussard
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury
225-342-0013
jbroussard@treasury.state.la.us
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