Weekly Market Commentary 1/18/2019

With the government shutdown now the longest on record – 28 days and still counting – the pain is reverberating ever more broadly throughout the economy. Unfortunately, it is difficult to quantify the extent of the damage, as the evidence is mostly anecdotal. With the shuttering of the Commerce Department – a critical source of economic data – economists are mostly in the dark in assessing the shutdown’s impact. But day after day, the headlines contain numerous stories on the sacrifices being made by the 800,000 government employees either furloughed or working without pay, and how their adverse circumstances are negatively affecting their families and local businesses. As the missing paychecks pile up, these victims of government dysfunction are forced to cut back purchases, which translates into lost sales for merchants, reduced tax revenues for local governments and less business for government contractors, resulting in additional collateral layoffs. What’s more, these monetary consequences are amplified by the psychological toll on government workers who find themselves adrift through no fault of their own.