It seems like every time I go to a conference, something happens in the economy that I need to address! I will be out of the office from Monday, January 22nd – Wednesday January 24th and will be meeting with most of the firms that I entrust with your money including Horizon and Vanguard. The good news is that I will get to hear, right from the horses’ mouths, what they think the shut-down and, longer-term the tax bill, will do to the economy and most importantly, the market. Once I get back I will send out an update.
What do the 2018 government shutdown and new tax laws mean for you?
Since the 1970’s, the government has shut down 17 times and while much news is made in the media, it doesn’t really mean the government isn’t functioning. Essential services that remain open include:
- The military will still report for duty. However, the troops, including those in combat, could potentially not be paid during a shutdown.
- Essential services, such as Social Security, air traffic control and the Transportation Security Administration, will continue to be funded even if some employees of those agencies are not.
- The U.S. Postal Service won't stop serving residents.
Services that will be closed if an agreement cannot be reached include:
- Thousands of federal employees would be placed on furlough if the shutdown continues.
- Some White House staff would be furloughed but others, considered essential, would continue to report to work.
- Many civilian Department of Defense employees will not be working during the shutdown.
- The popular panda cameras at the Smithsonian's National Zoo in Washington will be turned off. Visitors will still be able to visit the National Zoo, as well as Smithsonian museums, over the weekend. The zoo and museums would be closed beginning Monday.
- The shutdown will also affect the Bureau of Alcohol, Tobacco, Firearms and Explosives, meaning if you wanted a gun permit, you'll have to wait until the shutdown is over.
- Some national parks, zoos, or museums may be closed.
The Stock Market
Only time will tell but I’m optimistic that this will be a blip in a very strong year, even if we do see a bit of a slide at the beginning. The worst stock market decline was during the 1979 shutdown when the S&P dipped 4.4%. This was during Carter’s presidency with a Democratic-controlled Congress. The average decline of all government shutdowns is just .06%. In the 2013 shut down, stock actually rose 3.1%! You can read more detail about the history of the market during other shut downs HERE.
The New Tax Bill
Much still remains to be decided and worked out regarding the new tax bill and there will likely be several “fixer” bills in the future to cover the numerous gaps, holes, and contradictions.
If we have built a financial plan together, I’ve already started looking at how the proposed changes will affect our plan. If there’s anything I think we need to change regarding your financial plan or investments, we’ll talk at our next review, or you can schedule time to talk to me before that by clicking HERE.
If you don’t have a tax professional you trust, this may be the year to hire one. Reach out to me if you want a referral.
On a much lighter note, we’re co-hosting a document shredding event in our parking lot on January 31st from 4-6. FREE shredding, a food trucks. Need I say more? Bring your old documents to shred and come out to see me! More to come…2018 is already proving to be a very eventful year!
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Topics: Market Update