Hello from Belize! My family is on Fall Break from school this week and my husband had us get to the airport extra early in case TSA was slow from the shut down. This one is going on Day 5 so I figured it was a good time to refresh you on why this happens and the economic implications.
Shut downs have the potential to happen every September 30th, when the government’s fiscal year ends and the budget for the new fiscal year has to be approved by congress and then the president. There have been 10 shut downs since 1976 with the longest one being in Trump’s first presidential cycle in 2018 of 35 days.
Shut downs impact federal employees the most, with all non-essential service being closed until a budget is agreed upon. Most notably national parks, museums, and monuments closed, which would not be fun for us if we had elected to vacation in the US somewhere like Washington DC. Federal research activities are also halted, including at the National Institutes of Health (NIH) and Centers for Disease Control and Prevention (CDC), something that affects many folks in my city of Atlanta. Less stress are some visa and passport processing delays and delays in processing applications for some benefits, such as Social Security cards.
Even in other areas of the government you may want to check on friends who are employed there. Right now, an estimated 750,000 federal workers have been furloughed. I didn’t realize this, but "excepted" or "essential" personnel, such as law enforcement, military service members, and air traffic controllers, are required to continue working without pay. The good news is that federal workers are guaranteed back up pay once the shut down ends.
What are takeaways for the average person who this likely doesn’t impact quite so directly?
1. This is a really great example of why an emergency fund is SO important. For a dual income household (and I mean income from two sources, not one business), you should have 3-6 months of living expenses on hand and for single income household that amount increases to 6-12 months of living expenses (so basic expenses, not travel, clothes etc).
2. I’m always reminding clients the government ≠ the stock market and this week is certainly an indication of that. The S&P 500 pulled back a little on Monday but rallied through the rest of the week ending roughly 0.7% above the prior week. That could change if congress’ disagreement continue but consider this week a good reminder that developing an investment strategy with a risk profile you’re comfortable with and sticking it out is the most prudent strategy for investors.
3. On a lighter note, if you have a break starting the beginning of October each year like my family does, make sure you plan around possible government shut downs (for example the National Gallery in DC is closed right now and the Smithsonian will be forced to shut doors on the 12th) and get to the airport earlier than normal. Also don’t cut it close on passport renewal this time of year! Last, have a back-up plan during hurricane season if you plan to go somewhere tropical, but that’s last year’s story…
Have a wonderful rest of your weekend- I know I will! | 
