The Stakes of Another Government Shutdown

A potential U.S. government shutdown driven by Senate negotiations over immigration enforcement and tight legislative calendars presents a manageable risk rather than a market-altering event. Historically, such shutdowns result in modest, reversible macroeconomic effects, typically trimming only one-tenth of a percentage point from annualized quarterly GDP for each week they last. Because several appropriations bills have already passed, any upcoming disruption would likely be a partial shutdown with even smaller impacts on earnings, inflation, or Federal Reserve policy. While current political friction may signal challenges for Republicans in upcoming midterms, executive authority remains the primary driver for market-relevant policies in trade, AI, and industrial strategy. Furthermore, the presidential veto power protects existing tax incentives for corporate capital expenditure, ensuring that near-term political turbulence is unlikely to derail the broader 2026 economic outlook or fundamental asset performance.