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  • April Busby, CPA, CFP®

Stocks Can Still Go Up if the Government Shuts Down

Written by Wes Crill, PhD

Senior Investment Director and Vice President, Dimensional Fund Advisors

The US government temporarily averted a shutdown after the House and Senate passed a 45-day funding deal on September 30. But the specter of a shutdown still looms if a longer-term funding resolution fails to materialize before the stopgap ends. The US government has faced 14 funding gaps since 1981, Ten of which resulted in shutdowns. (See Exhibit 1 and Note 1.)

Exhibit 1 A History of Halts Funding gaps lasting at least one day since 1981

Funding-gap and shutdown dates are sourced from the US House of Representatives: History, Art & Archives. During these shutdowns, many nonessential functions of the government cease. In most cases, the fiscal shortfall was resolved within a few days. Some impasses, like the December 1982 episode, lasted merely a weekend. However, four shutdowns lasted at least five days. How did stocks fare during these prolonged episodes? The US market ended higher at the conclusion of three and was flat in the other. So, while a shutdown may be a nuisance, (See Exhibit 2 and Note 2.) history suggests it’s probably not cause for concern in your portfolio.

Exhibit 2 Open for Business Growth of wealth for the Fama/French Total US Market Research Index during government shutdowns lasting at least five days since 1981

Past performance is no guarantee of future results.

In US Dollars. Data presented in the growth of $1 chart is hypothetical and assumes reinvestment of income and no transaction costs or taxes. The chart is for illustrative purposes only and is not indicative of any investment. Data is provided by Fama/French. The Fama/French index represents academic concepts that may be used in portfolio construction and is not available for direct investment or for use as a benchmark. Index returns are not representative of actual portfolios and do not reflect costs and fees associated with an actual investment. See “Index Description” for a description of the Fama/ French index data.

This article originally appeared in Above the Fray, a weekly newsletter for Dimensional clients.


1. The appropriations process through which the federal government budget is allocated became stricter about shutting down government operations in the event of a funding gap after legal opinions issued in 1980 and 1981.

2. Especially for those with travel plans, since the impacted services may include the Transportation Security Administration (TSA).

Fama/French Total US Market Research Index: Fama/French Total US Market Research Factor + One-Month US Treasury Bills. Source: Kenneth R. FrenchData Library (


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