US Government Shutdown: What It Means For The Markets!
Published: 2025-09-30
Status:
Available
|
Analyzed
Published: 2025-09-30
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 4
Prediction
Topic
Status
It is uncertain who will be blamed for the current government shutdown.
"And it's anyone's guess who takes the blame."
Correct
The speaker advises against government shutdowns over basic funding decisions.
"So, it would be wise to do everything possible to avoid this, including not periodically shutting down the government over basic funding decisions."
Incorrect
A month-long US government shutdown could reduce GDP growth by 0.8% and potentially lead to a recession.
"If the estimates are right, a month-long shutdown could cost 0.8% 8% of growth, potentially tipping a slowing economy into recession."
Pending
Both political parties anticipate short-term political gains from a government shutdown.
"Then both sides think they win politically from a shutdown, at least in the short term."
Correct
A memo directs federal agencies to prepare for permanent job eliminations (RIFs) rather than temporary furloughs during a government shutdown.
"The memo directs federal agencies to prepare for reductions in force or riffs in government speak, not furlows, not temporary layoffs, permanent elimination of positions."
Correct
Federal agencies are instructed to prioritize cutting programs that are not aligned with the president's priorities during a government shutdown.
"The key line from the memo instructs agencies to focus cuts on programs quote not consistent with the president's priorities."
Correct
Credit rating agencies Moody's and Fitch have cited fiscal brinkmanship and debt limit standoffs as reasons for their negative outlook and downgrade of US credit.
"Moody's specifically mentioned fiscal brinkmanship when explaining their negative outlook on US credit. Fitch cited quote repeated debt limit political standoffs when they downgraded US debt in 2023."
Correct
Repeated government shutdowns and institutional decay, though not immediately visible in markets, will likely lead to a permanent increase in US government borrowing costs over time.
"It's not visible dayto-day. Markets don't price in institutional decay the way they price in earnings reports, but compound this over decades and they'll contribute to a permanent increase in government borrowing costs."
Pending
A slight increase in the perceived risk of the US dollar will eventually lead to a repricing of all financial assets.
"When the world's so-called risk-free rate becomes slightly less risk-free, everything reprices eventually."
Correct
Each week of US government outage is estimated to cause 0.1% to 0.2% damage to the economy, according to the CBO and Goldman Sachs.
"Estimates from the Congressional Budget Office and Goldman Sachs calculate the damage at about 0.1% to 0.2% for every week of government outage."
Pending
Government shutdowns could lead to the Federal Reserve making policy errors due to a lack of current economic data.
"The Fed could end up in policy paralysis or making interest rate decisions based on stale information, increasing the risk of policy mistakes."
Correct
The cessation of SBA financing during a shutdown can be fatal for small businesses reliant on loans for operations and expansion.
"The Small Business Administration's $200 million in daily financing vanishes. For a small manufacturer waiting on a loan to make payroll or a restaurant expanding to a second location, the timing can be fatal."
Correct
Federal contractors face significant financial hardship during shutdowns as they do not receive back pay, unlike federal employees.
"Federal contractors are in a particularly unenviable spot. Unlike federal employees who get guaranteed back pay, contractors get nothing, and many of them are among the lowest paid federal workers to begin with."
Correct
During the 2018-2019 shutdown, restaurants in the Washington D.C. area experienced revenue drops of 20-60%.
"The 2018 to 2019 shutdown showed this clearly. Washington DC area restaurants reported 20 to 60% revenue drops."
Correct
Government shutdowns result in billions of dollars in permanently lost economic activity across communities with a significant federal presence.
"Multiply that across every community with a major federal presence and you get billions in lost economic activity that never comes back."
Correct
If no deal is reached by September 30th at 11:59 PM, the US government will initiate shutdown procedures, including furloughs, park closures, and limited court operations.
"If no deal is reached by 11:59 p.m. on the 30th of September today, the government begins shutdown procedures. Non-essential employees get furow notices. National parks close. Federal courts run on reserve funds that last about 2 weeks."
Correct
The order in which agencies receive RIF notices during a shutdown will be significant, with potential for layoffs in departments like Education while defense contractors remain funded.
"The key thing to watch will be which agencies get riff notices first. Don't be surprised if the Department of Education gets mass layoffs while Department of War contractors stay paid."
Pending
A debt ceiling fight is anticipated next spring, focused on borrowing authority rather than spending levels.
"There's a debt sealing fight looming next spring, not about spending levels, but about borrowing authority."
Correct
A US debt ceiling breach would result in a default on obligations, causing a global financial crisis with frozen credit markets, a plummeting dollar, and soaring interest rates.
"A debt sealing breach, however, would be a default on financial obligations the US has already made. This would shatter trust in the foundation of the global financial system, likely causing credit markets to freeze, the value of the dollar to plummet, and US interest rates to skyrocket."
Incorrect
Federal agencies may implement permanent job eliminations (RIFs) instead of temporary furloughs during the current government shutdown, representing a significant escalation from previous shutdowns.
"The memo directs federal agencies to prepare for reductions in force or riffs in government speak, not furlows, not temporary layoffs, permanent elimination of positions."
Unrated
During the shutdown, the administration intends to permanently eliminate government programs that do not align with the President's priorities, using the shutdown as a mechanism for this.
"This memo instructs agencies to focus cuts on programs quote not consistent with the president's priorities."
Pending
The current approach to government shutdowns is being redefined from a temporary pause to a permanent elimination of government functions and programs.
"Put simply, it transforms the shutdown from a pause button into a delete key."
Pending
Repeated government shutdowns and fiscal brinkmanship will lead to a permanent increase in US government borrowing costs over time, impacting the global financial system.
"compound this over decades and they'll contribute to a permanent increase in government borrowing costs. When the world's so-called risk-free rate becomes slightly less risk-free, everything reprices eventually."
Correct
A government shutdown lasting a month could reduce US GDP growth by 0.8% and potentially push a slowing economy into recession.
"If the estimates are right, a month-long shutdown could cost 0.8% 8% of growth, potentially tipping a slowing economy into recession."
Incorrect
A debt ceiling fight is anticipated next spring, which poses a more severe threat than a government shutdown, as it could lead to a default on US financial obligations.
"There's a debt sealing fight looming next spring, not about spending levels, but about borrowing authority. Remember, a government shutdown is a self-imposed pause on future discretionary spending, which is embarrassing and disruptive. A debt sealing breach, however, would be a default on financial obligations the US has already made."
Correct
A US debt ceiling breach would severely damage the global financial system, leading to frozen credit markets, a falling dollar, soaring interest rates, a deep recession, and a global financial crisis.
"A debt sealing breach, however, would be a default on financial obligations the US has already made. This would shatter trust in the foundation of the global financial system, likely causing credit markets to freeze, the value of the dollar to plummet, and US interest rates to skyrocket. That is a recipe for a severe recession and a global financial crisis."
Incorrect