This month's update covers two key topics:
- Market Outlook: What the potential U.S. government shutdown could mean for the economy and investors.
- Cyber Security: October is Cyber Security Awareness Month - a reminder of the importance of staying alert and protecting your data.
At Hayes Vickers Private Wealth, we are committed to keeping you informed and secure, both financially and digitally.
U.S. Government Shutdown: What it means
The U.S. federal government entered a partial shutdown earlier this month. This means some government services have stopped or slowed down. These shutdowns usually cause news headlines and short-term volatility in the stock market, but history suggests their overall impact is small and short-lived.
About one-quarter of the U.S. government’s budget was not renewed by October 1st. Because of this, many government services will be disrupted, and many federal workers will not work until a deal is reached. This happens when political parties cannot agree on a budget. Republicans are pursuing a narrower spending bill, while Democrats are seeking an extension of healthcare subsidies and a reversal of recent cuts to healthcare programs. Negotiations are ongoing, but it’s difficult to gauge what a final resolution will look like or when one will arrive.
Importantly, not all federal services are “shut down”. Essential operations, including Treasury payments and mandatory spending programs like Social Security, continue uninterrupted. Most workers affected are temporarily on leave but usually receive backpay when funding returns. Please see the chart below for Employee impact by sector.
Economic and market implications
Shutdowns can cause short-term market volatility. Historical episodes show that U.S. stocks tend to weaken just before, during, and shortly after it ends. However, because most shutdowns do not last long, the equity market impact is typically short-lived, with stocks usually regaining lost ground soon thereafter.
For the economy, U.S. government shutdowns can temporarily slow down growth. Historically shutdowns have not been significant enough to derail ongoing expansions. The economy usually bounces back quickly after the shutdown ends. However, this shutdown is happening at a more uncertain time. The U.S. job market has recently shown signs of weakness, and President Trump's proposed plans to dismiss some federal workers during the shutdown add to the uncertainty. Moreover, reporting agencies are non-essential government services so the suspension of key economic reports, such as the monthly employment report, makes it harder to assess economic conditions in real time. It also makes the job of the U.S. central bank more challenging in the near-term, as policymakers evaluate whether further interest rate cuts are warranted to support the economy – for more information on interest rate cuts please read our September blog.
Takeaway
U.S. government shutdowns are not unusual. There have been 20 such episodes since 1976. Most of them have been resolved in under ten days. They can cause some short-term ups and downs, but they usually don't have a big impact on the economy or financial markets. We are closely watching the labour market, but in our view, U.S. government shutdowns are not a reason to change your investment plan.
October is Cyber Security Awareness Month
October is Cyber Security Awareness Month, a time to highlight the importance of protecting ourselves and our data from cyber threats. Cyber threats are always changing, and it's important for everyone to stay alert. At RBC and Hayes Vickers Private Wealth (HVPW) protecting our clients and their data is one of the highest priorities.
Cyber threats are real and can affect anyone. A fake email, weak password, or unsafe download can give criminal access to sensitive data. When information is stolen, it can cause stress, lost time, and financial harm.
That is why cyber awareness matters. Knowing what to look for, and taking small steps every day, makes a big difference in protecting your privacy.
This month, take a few minutes to learn how you can stay cyber smart. Some simple reminders include:
- Use strong, unique passwords for your accounts.
- Don't click on links or open attachments from unknown sources.
- Turn on multi-factor authentication (MFA) where possible.
- Keep software and apps updated.
- Report anything that looks suspicious.
At RBC and HVPW, we take a multi-layered approach to cyber security. Use the link below to find out how:
You can explore the following RBC resources to learn more about keeping data safe and spotting common cyber threats. Some highlights include:
- How to Protect Yourself Online
- How Cyber Criminal Make Contact
- How to Protect Your Business
- Protecting Your Children Online
- Talking to Your Kids and Teens About Online Safety
Cyber Security Awareness Month is the perfect time to consider how AI is reshaping the way we consume, share, and protect our information.
- Stay current on how to Get AI working for you, not against you
By working together, we can all play a role in protecting ourselves and our data from cyber threats.
Next Steps
- If this blog generates new ideas or questions about your family's goals don't hesitate to contact us.
- Share this blog with your friends and family.
- Review the Hayes Vickers Private Wealth March 24th Blog that includes tips and links about Fraud Prevention.
- Review the Hayes Vickers Private Wealth September 26th Blog about understanding rate cuts and their impact.
- Save the contact details for reporting fraud to RBC, it can be found here.
- Bookmark the website for more information and resources on cyber security.