HARVEY MEANS NO IMMEDIATE SHUTDOWN, CR INTO DECEMBER OR LONGER:

It took a disaster of historical proportions, but the political reality of Hurricane Harvey and its aftermath means that there is zero chance of a government shutdown in October.  Few political leaders want to be seen as playing politics with images of people being plucked from their roofs still fresh in everyone’s minds.  Instead, expect to see a Continuing Resolution and perhaps a temporary borrowing increase passed when Congress returns next week. This will start off the new fiscal year on a usual note, not great, but certainly not as bad as a shutdown.  The political fights aren’t going entirely away, though.  Look for a shutdown fight over Congressional unwillingness to fund a border wall and/or increase the debt ceiling more permanently, in December.   As we have previously written, a true shutdown seems unlikely right now at any point.  Congress does not want one heading into the mid-term elections and may have the votes to overcome any veto.  Regardless, though, significant talk of a shutdown has already become a distraction for both government and industry.  This will likely intensify as we move further into the fall.  As such, business may be a bit slower, even though the government remains open.