If the government shutdown lasts just days or even a couple of weeks, the robust stock market that President Donald Trump has boasted about probably will emerge unscathed.
A longer impasse, economists say, could rattle consumer and investor confidence, pulling stocks lower and dragging down the economy.
Economists and investment advisers generally didn’t foresee the shutdown that began Saturday lasting long enough to stifle the economy much. With pivotal elections in November, both parties would want to shield voters from any pain. Investors and consumers are feeling optimistic now based on the tax cut signed into law last month, and the economy is strong enough to power through a short shutdown.
But a shutdown that drags on for six weeks or longer—an unimaginable scenario—could kill a bull market and discourage people from spending money, says Randy Warren, CEO of Warren Financial Service, a Philadelphia-area investment advisory firm.
“These things start to pile up,” he says. “When you start to doubt the future, then you start to doubt investing.” And that’s among the reasons Warren and others don’t see a lengthy stalemate.
“It seems unlikely at this point that it would be a four-week shutdown,” says Beth Ann Bovino, chief U.S. economist at Standard & Poor’s. “It will hopefully be a blip.”
