It looks like the government shutdown may end today (Wednesday, November 12), at least until January 30, when Congress could be back at it again. Sunday’s announcement of a deal lifted stock markets, gold, silver, and most cryptocurrencies, so what will a full re-opening mean for the economy and the financial industry? I predict nothing but good things.
Money in Pockets
First, you can expect a wave of spending. Some 1.4 million federal workers who were not getting paychecks will get back pay. That’s six weeks of money injected into pockets and bank accounts. People who have been watching every penny will spend big with a gasp of relief. Restaurants will be booked. Grocery carts will be filled. Christmas shopping will kick into gear.
Second, all the money withheld from government employee paychecks for the Thrift Savings Plan, which is like a 401k retirement plan for government workers, will hit the various investment funds over a few days. That’s three times as much money as normal. Because the thrift plan invests in stocks and other financial instruments, that sudden influx of buying pressure should drive the market up even further than Tuesday’s 559 points.
Third, when more than 40 million SNAP (food stamp) recipients receive their benefits, they will head for the stores to fill their fridges and restock their pantry shelves. Expect a crowd at stores when the funds hit EBT cards in your state. This may cause empty shelves and take a few days to restock. Because SNAP was shut down for less than two weeks, instead of the full six weeks the government was shuttered, this will be a noticeable event rather than a tsunami. Still, it will create ripples. The money from SNAP benefits will trickle through the supply chain and reach the bottom line of grocers, manufacturers, distributors, and even truckers and farmers.
Fourth, consumer sentiment will go up. Nothing boosts consumer confidence like having money in your pocket. The relief of knowing that the shutdown is over will make people feel better. Air travelers will also be happier as the air traffic situation gets back to normal.
More Division
You could argue that the Republicans “won” the shutdown because the Democrats caved, but while the Democrats clearly lost, I’m not entirely sure the Republicans won. Yes, they came out ahead, but it will be remembered as an ugly period rather than a resounding victory. That’s like winning a football game but losing your star quarterback for the season.
The shutdown also showed how many people depend on the government for economic support. It exposed us to too many entitled SNAP recipients, including some not-very-pleasant people. It reminded us that the line between citizen and criminal is both thin and malleable. The SNAP shutdown also showed every taxpayer who is struggling to support their family that a good portion of their tax dollars are going to support someone else. That’s likely to create resentment, especially against illegal immigrants who are on government programs.
The shutdown demonstrated that the two sides can’t agree on anything and both will do anything to come out ahead. In this case, Senator Schumer refused to support the same kind of bill he supported more than a dozen times under Biden. The Republican House Leader refused to even convene the House so it could not get roped into voting for a different solution.
It also showed us how much infighting exists within the Democratic Party and how extreme some leftists are. They are willing to let people starve to make a political point.
Prepping Ramifications
With any luck, the shutdown created a few preppers, some folks who will keep a couple weeks’ worth of basic foodstuffs in a cabinet. This isn’t hard, and I believe even those on SNAP can do it. My local Walmart has multiple aisles of things you can leave in your pantry for six months to six years. There is no excuse not to be prepared if there is another shutdown in January or in October 2026 when Congress votes on the next budget.
Maybe the shutdown created some savers or convinced a few folks that living paycheck-to-paycheck is not a winning formula. Just because our grocery stores have just-in-time inventory systems doesn’t mean our wallets should. Whether you build a small reserve fund in your bank account or in cash under your mattress doesn’t matter, as long as you have one. (OK, I take that back. You need to have some emergency cash on hand for when the Internet or grid goes down.)
The biggest lesson I take from this episode is how fragile our modern society is and how important the flow of funds is to keeping it up and running. The United States, like every free and advanced economy, depends on a delicate balance, and when it goes out of kilter, the social contract most of us live by is quickly destroyed. Take away regular injections of fresh money, and society grinds to a halt. Tell people to keep working without pay, and they will call off sick. Stop feeding people, and crime will skyrocket. It is just what we expect to happen when the SHTF, and it doesn’t paint a pretty picture for life after THETWAWKI.
Disclaimer
This post is not financial advice. I am not a financial advisor, accountant, economist, real estate expert, tax professional, or lawyer. I am simply a well-educated prepper relaying my personal beliefs established over more than 30 years of prepping. Do your own research and consider consulting a financial professional to assist you with your financial decisions.
