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1

How Scott Bessent used financial engineering to finance the $2 trillion deficit while leaving it untouched—and created a $1.45 trillion shortfall

2

Meet the 33-year-old CEO betting on boomers chasing their grandkids—and millennials selling their first house

3

The tables have turned: Florida and Texas are the biggest losers in the housing market as Ohio emerges a surprise winner

How long will the shutdown last?

By
Nin-Hai Tseng
Nin-Hai Tseng
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By
Nin-Hai Tseng
Nin-Hai Tseng
Down Arrow Button Icon
October 1, 2013, 9:00 AM ET
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FORTUNE — For the first time in 17 years, the government has shut down. Hundreds of thousands of federal employees will be temporarily out of jobs, potentially costing the economy about $1billion a week in lost pay by furloughed workers. Non-essential government employees from park rangers to back office administrators to marine biologists will be forced to stay home without pay.

It stands to reason that the longer Uncle Sam is out of business, even if only partly, the more costly it is for the economy. But if history is any measure, investors might barely feel it. To be sure, this shutdown could cost the economy plenty, but this one likely won’t last as long as the last one, where in 1995 the government went dark for 21 days between Dec. 15 to January 6, Barry Ritholtz noted on Monday.

Since 1976, when Congress revised its budgeting process, Uncle Sam has closed its doors 17 times. And on average, the government shut down for 6.4 days — barely a week. That’s still a good chunk of time, but it has been worse. In 1978, the government shut down for 17 days; 12 days in 1977; and 10 days in 1976. As the Washington Post notes, not all so-called shutdowns between 1976 and 1979 actually stopped government from functioning; some were just funding gaps that didn’t have any real-world effects.

MORE: The DNC is nearly broke

Spending gaps or shutdowns, none exactly sent markets tanking between the days when government stopped and then resumed. And of the 17 government shutdowns, returns of the 500 companies listed on the Standard & Poor’s Index (SPX) either rose slightly or stayed relatively flat seven of those times: In 1981, 1982, 1983, 1986, 1987, and 1995 (there were, technically, two shutdowns that year), when the government shut down between one and eight days.

On Tuesday, U.S. stock-index futures advanced, suggesting the S&P 500 Index may rebound from a three-week low. In early morning trading in New York, S&P futures expiring in December rose 0.3 % to 1,678.8.

Needless to say, it may be trickier this time around. Not only must Congress decide on a spending bill to return the government to full operation, Washington must also tackle another looming deadline to raise the federal borrowing limit or possibly default on the nation’s debt. That’s the bigger deadline, which the U.S. Treasury says falls on Oct. 17. Markets may not be as forgiving at that point.

But the debt ceiling also gives Congress all the more reason to resolve the government shutdown sooner rather than later.

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