Fitch's Assessment on the Shutdown's Impact

Fitch Ratings recently stated that a short-term government shutdown in the United States is unlikely to significantly affect most public finance entities. However, the agency emphasized that prolonged shutdowns could negatively impact entities relying on federal support for healthcare, education, housing, and transit programs.

Protected Programs and Services

Programs such as Medicaid and Medicare, which are not dependent on annual budgets, remain unaffected by disruptions. Similarly, transportation projects funded by the Highway Trust Fund are safeguarded due to dedicated fuel taxes and structural protections.

Sector-Specific Impacts

Federal employees in defense and postal services will continue their work uninterrupted. Conversely, other sectors might face temporary layoffs or be required to work without pay. The shutdown could also cause minor operational disruptions at airports, with non-essential FAA and TSA workers furloughed. However, the financial risk remains very low. Airport capital projects might be delayed if federal grant funding is withheld.