AUDIO: The Financial Impact of a Government Shutdown

Listen in to the Money Matters Minute:

{module >>AUDIO: The Financial Impact of a Government Shutdown} 

 

Transcript:

This is Wes Moss with a Money Matters Minute.

For the third time now in three years we have worried about a government shutdown and now it finally happened. This is the first shutdown since 1996, but there have been 17 since 1976. A shutdown may not be terrible for investors. Historically, the stock market is higher by nearly 3 quarters of a percent a month after a shutdown.

The reaction so far has been relatively benign with the S&P 500 still only a few percentage points away from an all time high. The real date to watch out for is October 17th. That marks the debt ceiling. The closer we get to that deadline, the closer we get to a possible default on our debt in the U.S. or a U.S. credit downgrade. Back in August of 2011, when the U.S. credit rating was lowered, markets ended up with a 16% correction.

Now, the likelihood of a default is nearly non-existent. But, the fear that it creates in the stock market may present a buying opportunity for investors.

For more on this and answers to all of your money questions, tune in this Sunday morning at 9 AM for Money Matters live on news talk WSB.