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Leveraging the Shutdown: Managing Risks While Finding Opportunities When Government Stops Working

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Leveraging the Shutdown: Managing Risks While Finding Opportunities When Government Stops Working Services Services Overview Governance Consulting Outsourced CIO Research Values Aligned Investing Managed Portfolios Curio Who We Serve Our Clients Community Foundations Healthcare Higher Education About Us Firm Overview Our Team Culture Insights Publications Podcast Videos Studies News & Events News Events Forum 2023 Contact Us Services Services Overview Governance Consulting Outsourced CIO Research Values Aligned Investing Managed Portfolios Curio Who We Serve Our Clients Community Foundations Healthcare Higher Education About Us Firm Overview Our Team Culture Insights Publications Podcast Videos Studies News & Events News Events Forum 2023 Contact Us Market Perspectives Leveraging the Shutdown: Managing Risks While Finding Opportunities When Government Stops Working Gregory Dowling, CFA, CAIA Head of Research / Chief Investment Officer Sep 30, 2025 In Brief History shows that shutdowns in the United States have usually been short-lived and have minimal effects on GDP and long-term market returns. The longest shutdown—during Trump’s first term—lasted over 30 days, but even then, overall economic disruption remained modest. The shutdown will furlough many government employees, complicating Federal Reserve decision-making, which we consider a nontrivial risk. However, unless an extended shutdown occurs, which we think is highly unlikely, we believe the broader economic and market impact will remain small. Whether the shutdown is short-lived or continues for a more extended period, it will likely come with market dislocations that may translate into opportunities for investors.  

On October 1, the U.S. government entered a shutdown due to a failure to secure a funding deal. While the Republicans hold a Congressional majority, they do not have a wide enough margin in the Senate to restore funding on their own. This means they will need help from the Democrats. The most significant disagreement concerns the impending expiration of Affordable Care Act (ACA) subsidies. Democrats are demanding an extension for their vote. Republicans have thus far been unwilling to compromise.

While shutdowns sound scary, we have been here before. There have been 20 since the modern appropriation process was formalized in 1976, and they have tended to be short-lived, averaging just eight days. The only concerning fact is that the longest number of furloughed days occurred during President Trump's first term, when employees were furloughed for over 30 days. 


U.S. Shutdowns Have Generally Been Short-lived
Duration of Government Shutdowns/Funding Gaps: FY1977-FY2019

Data Source: Strategas, September 2025.

  Labor and the Statistics of Labor Impact When government employees are furloughed due to a shutdown, many non-essential government offices close, and their workers stop getting paid. This has the potential to affect a variety of sectors and, the longer it goes on, it may have a rising impact on consumer and business confidence. Shutdowns also affect government economic data releases, including Friday’s payroll numbers, which can be market moving in themselves. Not having this data may hinder the Federal Reserve’s ability to gain clarity on whether to cut interest rates in December based on economic conditions. That may be a stickier problem for markets.

While economic visibility may be temporarily dimmed, from an actual economic perspective, government shutdowns in the United States have had very little impact on overall GDP or the stock market. In fact, in most cases, after an initial drop, the stock market was up on the closure. GDP disruptions have been minuscule and temporary. It would likely take a more extended shutdown to make a significant economic impact. While President Trump’s first term set the record, and a short shutdown is our base case, a more extended shutdown (45–60+ days) seems very unlikely to us. 

 

The Spending Impasse May Have a Silver Lining The U.S. economy is strong, and we expect the shutdown to be short-lived and have no material economic or market effects. But whether the duration is short or more extended, we think the shutdown may reveal buying opportunities for long-term investors. If a more extended shutdown were to occur, we believe investors should not fear the situation, but rather look for the silver lining while managing the evolving risks. It is impossible to predict the exact timing of any changes ahead, but if the shutdown lingers, it may offer a pivotal moment for investors to access deeper discounts across the equity spectrum. 

 

 

 

 

DISCLOSURES

This information was prepared by Fund Evaluation Group, LLC (FEG), a federally registered investment adviser under the Investment Advisers Act of 1940, as amended, providing non-discretionary and discretionary investment advice to its clients on an individual basis. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Fund Evaluation Group, LLC, Form ADV Part 2A & 2B can be obtained by written request directed to: Fund Evaluation Group, LLC, 201 East Fifth Street, Suite 1600, Cincinnati, OH 45202 Attention: Compliance Department.

This information is prepared for informational purposes only. It does not address specific investment objectives, or the financial situation and the particular needs of any person who may receive this presentation. Neither the information nor any opinion expressed in this report constitutes an offer, or an invitation to make an offer, to buy or sell any securities.

The information herein was obtained from various sources. FEG does not guarantee the accuracy or completeness of such information provided by third parties. The information in this presentation is given as of the date indicated and believed to be reliable. FEG assumes no obligation to update this information, or to advise on further developments relating to it.

Any return expectations provided are not intended as, and must not be regarded as, a representation, warranty or prediction that the investment will achieve any particular rate of return over any particular time-period or those investors will not incur losses.

 

 

 

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