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The U.S. government is in Day 24 of a partial government shutdown, which is now the longest in U.S. history. The closure reached an inflection point on Friday, when government workers’ first payday during this closure passed without a paycheck. While past shutdowns have largely been a nonevent for the U.S. economy, the current shutdown has lasted for an unprecedented amount of time, and there is still no end in sight. As of now, we believe this shutdown will have limited long-term ramifications for economic growth, but it’s important to recognize that we’re in uncharted territory.

Every January, it’s customary to look back at the year that was. What were the highlights? What were the “lowlights”? What were the events we’ll always remember? Most importantly, what did we learn?

Economic data has been under a microscope since the Federal Reserve (Fed) emphasized its allegiance to data dependency after raising interest rates in December. The Fed’s rate hike and Fed Chair Jerome Powell’s post-meeting press conference rhetoric spooked investors, who have been bombarded with negative headlines about trade, geopolitical squabbles, and a weakening global economy.

While technically not a bear market, it sure felt like one. From its September 20 high through Christmas Eve, the S&P 500 Index fell 19.8%, including a more than 7% one-week (December 14–21) decline unmatched since the 2008–09 financial crisis. Should the S&P 500 end the month where it closed on Christmas Eve, December would mark the third-worst month ever for stocks, behind only October 1987 (-21.8%) and October 2008 (-16.9%).

It’s been a rough fourth quarter for the markets. It seems like week after week, the major indexes – like the Dow and S&P 500 – get hammered by volatility. These days, just about every news website you can find is packed with breathless headlines about plummeting stocks, photos of nervous-looking traders, and editorials about a possible bear market in 2019. . .

For about a week after Thanksgiving, market volatility was like the rest of us – sleepy and stuffed with turkey. The markets themselves took advantage, with the S&P 500, Nasdaq, and Dow all posting their biggest weekly gains in years.1 And on Monday, after President Trump announced a tariff “ceasefire” between the U.S. and China, the Dow rose 288 points...