History of government shutdowns in the US – and what happened to the S&P 500 afterward?
Everyone is talking about the US government shutdown, which is becoming the longest shutdown in history, tension is rising, and investors are also starting to worry about how the shutdown will affect the market.
This image above tells a fascinating story about one of the most recurring economic experiments in American history – government shutdown – and what happened to the stock market afterward.
According to data from Carson Investment Research, out of more than 20 government shutdowns since the 1970s, the average decline of the S&P 500 index during the shutdown itself was only 0.3%, and in 86% of cases, the market was higher a year after the shutdown ended, with an average increase of 12.7%.
What does this actually mean?
Despite the media pressure every time the US government 'shuts down', history shows that the impact on the market is only temporary.
In most cases, indices rebounded with the end of the shutdown – especially when investors realized it was primarily a political event rather than a substantial economic one.
Take an interesting example: during the longest shutdown in history (2018-2019, during the Trump administration), the market actually rose by about 2.3% during the shutdown, and 23.7% in the following year!
Historically, a government shutdown does not pose a continuous threat to the stock market, but rather 'temporary noise' – sometimes even an opportunity...
Data updated as of November 4, 2025.