{"id":21800,"date":"2023-09-24T15:40:38","date_gmt":"2023-09-24T15:40:38","guid":{"rendered":"https:\/\/microloannexus.com\/investing\/a-government-shutdown-after-labor-strikes-only-makes-the-feds-job-harder\/"},"modified":"2023-09-24T15:40:39","modified_gmt":"2023-09-24T15:40:39","slug":"a-government-shutdown-after-labor-strikes-only-makes-the-feds-job-harder","status":"publish","type":"post","link":"https:\/\/microloannexus.com\/?p=21800","title":{"rendered":"A Government Shutdown After Labor Strikes Only Makes the Fed’s Job Harder"},"content":{"rendered":"
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The United Auto Workers expanded its strike on Friday.<\/h4>\n


\n Bill Pugliano\/Getty Images
\n <\/span>
\n <\/figcaption><\/figure>\n<\/p><\/div>\n

Saturday marked the autumnal equinox, and fall is in the air: The weather is cooling, pumpkin spice is everywhere, and\u2014as has happened every so often in recent years\u2014the U.S. is nearing yet another government shutdown.<\/p>\n

Congress isn\u2019t expected to reach a compromise and pass a plan to keep the government open before Oct. 1, the start of the federal government\u2019s new fiscal year.<\/p>\n

\n

A number of factors seem to be eroding confidence in lawmakers\u2019 ability to reach a deal before next weekend. Among them, Republicans in the House of Representatives haven\u2019t reached a consensus on a continuing resolution for spending amongst themselves, let alone one that would appease both sides of the Senate.<\/p>\n

While government shutdowns reflect how partisanship and grandstanding have hamstrung American politics, they tend not to be too disruptive to markets. After all, they have become relatively commonplace, don\u2019t last very long, only apply to nonessential services, and the government pays furloughed employees in full once normal operations resume.<\/p>\n

While shutdown is \u201can ominous term, like the dozens of government shutdowns before it, it won\u2019t have a material impact on the economy,\u201d writes Sevens Report Founder and President Tom Essaye.<\/p>\n

That doesn\u2019t mean that it will be a complete nonevent, however. Historical data around the previous 19 government shutdowns show the
\n S&P 500
\n tends to decline in the week before a shutdown\u2014a pattern that has become more pronounced since 1995, note analysts at Soci\u00e9t\u00e9 G\u00e9n\u00e9rale.<\/p>\n

The anticipation of a shutdown seems to be worse than the event itself: During shutdowns since 1995, the
\n S&P 500
\n has actually rallied by an average of 2.3%.<\/p>\n

The firm\u2019s economist Stephen Gallagher predicts that this year\u2019s shutdown will likely be a relatively short one, further blunting the effect on markets. <\/p>\n

But this year is a bit different, because isn\u2019t just the threat of a government shutdown grabbing headlines. There have also been three major labor strikes happening in the U.S., from entertainment-centric Writers Guild of America and performers\u2019 SAG-AFTRA unions, and the United Auto Workers.<\/p>\n

Much like the government shutdown, the economic fallout from the strikes likely will be limited. The strikes ultimately affect a small number of workers relative to the overall economy, though fewer automobiles manufactured would cloud near-term economic data.<\/p>\n

And therein, argues Essaye, lies the rub: Strikes may not be big enough to derail the economy, but they obscure trends and information when the Federal Reserve needs the clearest picture possible of the economy.<\/p>\n

\u201cBoth the shutdown and strikes stand to make the data 1) Less available, 2) Less reliable and 3) Less accurate,\u201d he writes. \u201cA government shutdown could result in economic data not being produced (including the jobs report) and the strikes will skew the near-term economic data.\u201d<\/p>\n

\u201cThink of it this way: If the Fed is trying to engineer a soft landing for the U.S. economic airplane,\u201d he adds, \u201ca shutdown will cause partial instrument failure and the strikes make it foggy!\u201d<\/p>\n

Landing a plane in fog isn\u2019t an impossible feat, of course, but few bulls would want the Fed\u2019s balancing act to get even trickier at the moment. While a lack of data could make the central bank a bit more dovish in the near term, it likely won\u2019t change its overall outlook of higher interest rates for longer. <\/p>\n

To mix a metaphor, the shutdown and strikes could all end up being a tempest in a teapot. But it could still leave a bitter taste in some investors\u2019 mouths.<\/p>\n

Write to Teresa Rivas at teresa.rivas@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The United Auto Workers expanded its strike on Friday. Bill Pugliano\/Getty Images Saturday marked the autumnal equinox, and fall is in the air: The weather is cooling, pumpkin spice is everywhere, and\u2014as has happened every so often in recent years\u2014the U.S. is nearing yet another government shutdown. Congress isn\u2019t expected to reach a compromise and<\/p>\n","protected":false},"author":1,"featured_media":21801,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[],"class_list":{"0":"post-21800","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing"},"yoast_head":"\nA Government Shutdown After Labor Strikes Only Makes the Fed's Job Harder | Micro Loan Nexus<\/title>\n<meta name=\"description\" content=\"The United Auto Workers expanded its strike on Friday. 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