The probability of an early-October government shutdown has declined to 35%, down from a 50% chance over the past couple of weeks, Goldman Sachs says.
Hurricane Harvey has made it less likely that the US government will experience a shutdown in early October, Goldman Sachs says.
The firm lowered its probability to 35%, down from the 50% forecast it had maintained over the past couple of weeks, citing the ongoing natural disaster.
"Allowing a partial government shutdown when federal relief efforts are underway would pose greater political risks than under normal circumstances, raising the probability that lawmakers will find a way to resolve disagreements," Alec Phillips, the firm's political economist in Washington, wrote in a client note.
Congressional leaders are likely to combine efforts to allocate more funds for disaster relief with "legislation to extend federal spending authority and/or raise the debt limit," Phillips said. He sees that increasing their chances of resolving the impasse ahead of a shutdown.
Congress has historically appropriated more relief funds following major US hurricanes, said Goldman, which also provided this handy visual guide:
This is not to say the looming threat of a shutdown has been eliminated. Phillips noted that President Donald Trump had said one may be in the cards if his border-wall initiative isn't funded.
He also said an extension of spending authority would probably be temporary, which would simply postpone the threat of a shutdown rather than eliminate it.