Shutdowns, Tariffs, and What Really Moves Markets

Markets don’t like surprises, but they’re surprisingly good at ignoring Washington now nearly two weeks into the government shutdown, investors are asking the usual questions: How long will it last? Will it hurt the economy? And does it actually matter for the market?

1 | Shutdowns in Perspective

The current shutdown began October 1, 2025 - now on Day 12, putting it among the longer ones but still far from record-setting. The 2018-19 shutdown lasted 35 days; 2013’s stretched to 16; and the mid-’90s pair ran 5 and 21 days.

Historically, markets have taken these events in stride. According to S&P Global Market Intelligence, the S&P 500 has risen in over half of all shutdowns since 1976, averaging roughly flat performance. The longest shutdowns barely dented long-term returns. In short: big headlines, small market footprints.

2 | What’s Different This Time

While most shutdowns are political theater, this one lands in a trickier environment - high interest rates, sticky inflation, and investors on edge for any data that might steer the Fed. With many agencies closed, the flow of economic reports slows to a trickle. That data blackout adds guesswork to an already uncertain landscape.

Then came Friday’s twist: tariffs. A sudden proposal of potential 100% tariffs on China did more to rattle markets in a single afternoon than the shutdown did all week. Tariffs hit earnings, supply chains, and consumer prices directly - a real-economy concern, not just a policy stalemate.

3 | What Could Change the Tone

If the shutdown resolves quickly, it’ll fade from memory. But if it drags on past 20 days, the ripple effects build: delayed paychecks, slower spending, missing data, and rising political fatigue. Add tariff risk or Fed missteps on top of that, and volatility could pick up fast.

4 | This shutdown:

This shutdown is mostly a budget standoff, not a financial crisis. History suggests markets recover quickly once government operations resume. The bigger issue is how investors react - not the event itself. That’s why it pays to focus less on the headlines and more on how your portfolio is positioned for risk.

5 | Staying Prepared

We can’t predict when headlines will hit, but we can manage how portfolios respond when they do. I use disciplined, evidence-based strategies designed to help address market risk when conditions change, while keeping clients aligned with their long-term goals.

Shutdowns and tariffs come and go - but having a steady process for navigating both never goes out of style.

👉 Are you looking for a fee-only advisor to work with? Book your free discovery call and let’s start the conversation.

John Piershale, CFP®, AEP®

Fee-Only and Fiduciary Advisor

This article is for educational purposes only and is not legal or tax advice. Please consult an attorney or tax advisor regarding your personal situation. John Piershale Wealth Management, LLC is an Investment Adviser registered with the State of IL and in other jurisdictions where exempt from registration. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.