Executive Summary 

• The recent shutdown became the longest in U.S. history, lasting 43 days before a funding deal was reached.
• The continuing resolution restores broad funding through January 2026 and some key items through September 2026.
• The shutdown is expected to weigh on growth in Q4 but should be mostly recoverable in subsequent quarters.
• Post-shutdown equity market returns have historically been positive, though the sample size is relatively small.
• The economy and markets have shown resilience amid the government shutdown and should benefit from its reopening.

The federal government has reopened after the longest shutdown on record  

• The President signed a temporary funding deal last week, officially ending the longest government shutdown in U.S. history at 43 days.
• Much of the agreement to reopen the government is temporary, potentially setting up another shutdown in January 2026.
• However, the nature of that shutdown could be notably less severe, as several programs, including the Supplemental Nutrition Assistance Program (SNAP), have been fully funded through next September.

The shutdown is expected to weigh on growth in Q4 but should be mostly recoverable in subsequent quarters

Data shown are estimates for the effect on the annualized quarterly growth rate of U.S. real gross domestic product (GDP) from the federal government shutdown. Actual results may differ materially from estimates.

• The 43-day shutdown is estimated to have reduced Q4 2025 GDP growth by 1.5%, with most of the decline expected to reverse over the course of the next few quarters as delayed spending and production resume.
• Minor residual slowdowns in later quarters reflect temporary inefficiencies resulting from lost output from government workers and reduced business confidence, though output is projected to normalize by year-end.

Post-shutdown equity market returns have historically been positive, though the sample size is relatively small

Shown in the left panel is the price performance of the S&P 500 during the trading days before and after federal government shutdowns that lasted longer than five days, with each line ending when the government reopened. Federal government funding lapses that did not result in shutdown procedures are excluded from the dataset. Shown in the right panel is the price performance of the S&P 500 in the weeks and months following the end of federal government shutdowns that lasted longer than five days, measured from the day federal operations resumed. The S&P 500 is a market capitalization weighted index of large cap stocks in the U.S. Past performance may not be indicative of future results. One cannot invest directly in an index.

• Market performance during government shutdowns has varied significantly, reflecting other influencing factors as much as, if not more than, concerns about the shutdown.
• In contrast, history shows that the market outcome following shutdowns has been more consistently positive, largely reflecting the long-term tendency for markets to rise with time.