State Street IM: US government shutdown to be short and uneventful

State Street IM: US government shutdown to be short and uneventful

3 oktober 2025

Verenigde Staten

The US government shutdown caused by Congressional deadlock over health insurance subsidies is expected to be brief with little macroeconomic impact, according to Vladimir Gorshkov, macro policy strategist at State Street Investment Management. But will the Health Care sector be impacted?

Government shutdowns are normally look-through events, and Vladimir Gorshkov doesn't expect this one to be any different. Investors focused on macro aggregates can look past it, with the caveat that there may be a delay in key data releases for October. Those with a more granular focus may find an opportunity in the Health Care sector, as healthcare policy sits at the center of the budget standoff.

Shutdowns affect roughly two million workers, including government contractors and about half the federal workforce, who are either furloughed or required to work without pay. Missed wages and interruptions to government services can impact the economy. But real disruption occurs only if the shutdown lasts for a long time.

Deadlocked over health insurance subsidies

'The most market-relevant element of today’s shutdown is the fate of health insurance subsidies, set to expire at year-end. Originally part of the Affordable Care Act (ACA), 2010, these subsidies—delivered through enhanced premium tax credits—have expanded significantly over time, benefitting insurers in particular. Stressing the need for affordable health insurance, Democrats are pushing for an extension of these enhanced ACA tax credits. Republicans oppose extending them on fiscal austerity grounds. Rolling subsidies back likely will reduce coverage levels, negatively affecting sentiment in the Health Care sector,' Vladimir Gorshkov says.

Political calculus and the path to resolution

'We’re confident this shutdown will be short and uneventful because the political stakes are clear, and the off-ramp is visible. Democrats, under pressure from voters to show that they can be effective in opposition, are angling for a tangible policy win. Allowing these subsidies to expire increases health insurance costs for millions of Americans. By taking a stand, they are forcing Republicans to 'own' the issue of cutting healthcare.[...] Therefore, we expect the Republicans to give in within a week or two and allow the health insurance tax credits to be extended. This scenario reinforces our generally constructive investment outlook on the US Health Care sector. In the meantime, data-dependent investors should brace for delays in key macro data,'  he adds. 

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