The Investment Implications of the Government Shutdown

Dr. David Kelly, Chief Strategist at J.P. Morgan Asset Management, discusses the ongoing government shutdown as of October 6th, 2025, noting that markets appear unconcerned despite the negative implications for the economy. He outlines three main problems: the direct economic drag from furloughed workers and contract disruptions, the confusion caused by the interruption of key economic data collection (e.g., jobs and CPI reports), and the timing of the shutdown during an already soft economic patch. Kelly highlights concerns about slowing job growth, potential GDP decline in Q4, the impact of immigration policies on the labor force, and the inflationary effects of tariffs. He concludes by suggesting that the Federal Reserve might err on the side of being too easy due to data absence and political pressure, and advises investors to add diversification and reduce risk in their portfolios.