Just in time?
As we wrote yesterday, the latest US government shut down has become the longest in history. The impact upon sentiment and consumption is sure to have been significant but it is too early to identify from the data just how much damage was done. Thanks to the eight democrats who have broken with the party line to secure a deal in the Senate, this government shutdown may soon be over. However, this measure will only last a couple of months and faces some hurdles ahead.
The vote that took place last night will only be the first step in a longer sequence to reopen the government. The approval of the Senate of any deal to provide funding to the government will require ratification from the House which will not take place until tomorrow. Presidential approval should also be a formality, however, it may not be until significantly later this week that the funding taps are turned back on and long overdue cheques are signed. Markets have been continuing to cling onto soft data in the absence of large public data releases.
One of the most recent of such publications was the University of Michigan’s consumer sentiment survey. Published on Friday, this statistic showed consumer sentiment in the US dropping to almost its lowest on record. The final publication was significantly lower than consensus expectations and, needless to say, the prior recording. It is highly unlikely that the impact upon consumption and labour will have been insignificant. As hard data publications are restored and backdated, market volatility should be expected with markets having been flying partially blind for at least 41 days. Today’s US bank holiday (Veterans day) may delay any significant reaction to the reopening of government funding.
Discussion and Analysis by Charles Porter
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