3 Things We Don't Know Thanks to the Government Shutdown

Something strange happened on the first day of October: While we learned that our ne'er-do-well "representatives" in Washington failed to hammer out a compromise to end the current impasse, the stock market went, oddly enough, up.

Admittedly, not by a lot. But up nonetheless, as the S&P 500 (^GSPC 0.87%) advanced by 13 points to finish the day at 1,695 -- a mere 30 points below its all-time high of 1,725.

To anyone steeped in history and nonpartisan economics (if there is such a thing), then this probably doesn't come as a surprise. Although the current infighting may seem novel, the reality is that we've been here before.

In late 1995, the federal government shut down for 28 days before President Clinton and then-House Speaker Newt Gingrich finally agreed on a deal. As my colleague Morgan Housel said in a column last week: "[T]he shutdown didn't have a measureable impact on long-term businesses. If you're an investor, that's really all you should care about."

It's hard to argue with this logic and precedent. Economists currently predict that a one-week shutdown will lower GDP by only 0.1% to 0.2%, while a two-week shutdown will cost us 0.3% of national output. This isn't good, but it also isn't economic Armageddon.

More than anything, it's just annoying.

Beyond this, however, I can't help thinking there might be another explanation for the failure of stocks to react to the news. And that is the fact that the government shutdown has pinched off investors' supply of critical economic metrics.

Last week, three economic reports were delayed as a result. We would have normally learned about monthly construction spending on Tuesday. Factory orders on Thursday. And on Friday, there was the all-important report on September unemployment.

Because of the furloughs, however, investors and traders have been left to guess how the results will ultimately turn out. Indeed, had any or all of these gone strongly in one direction or another, we may very well have been having a different conversation about the impact of the shutdown on stocks.