With a U.S. government shutdown underway, what are the implications for investors? Jeff Evans, VP, Director and Lead of Empirical Research and PM Support with TD Asset Management joins MoneyTalk to discuss.
Transcript
Greg Bonnell: Investors have another risk to consider with a U.S. government shutdown underway. Joining us now to discuss what it could mean for the markets, Jeff Evans, VP, director and lead for empirical research and PM support with TD Asset Management.
Jeff, always great to have you on the program.
Jeff Evans: Great to be here. Thanks for having me.
Greg Bonnell: Markets are fluid, obviously. We don’t know what they’re going to do from one minute to the next, but it seemed heading into this we did see what we’d expect in perhaps gold and bonds and in equities. But when we think about a government shutdown and the mechanics of it, what does it actually mean for the markets longer term?
Jeff Evans: Yeah, so it certainly hasn’t been a dull year in Washington. Lots going on. But I think what’s important for investors to keep in mind on a government shutdown, typically these are short-term events, last for a couple of days. Most government shutdowns are less than a week. And the main reason for that is that these are very expensive.
Now, obviously, for the federal government, not so much. They’re not spending any money over the next little while while they’re shut. But when you think about all the knock-on effects from that, all of the businesses, all of the consumers that are either directly exposed to this– 700,000 federal workers potentially furloughed– and then all the indirect impacts on other businesses– services, spending, and so on. When we’ve talked to economists about this, the typical impact would be about 0.25 to 0.5% of GDP per month of shutdown.
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