Rightly or wrongly, a bevy of companies are likely to blame weak fourth quarter earnings on the government shutdown and the debt ceiling debate.
In third quarter earnings commentary and guidance, several companies in a wide swath of industries have outright warned that the D.C. situation would impact fourth quarter earnings, or at least remarked that it added a measure of uncertainty. And some, such as Stanley Black & Decker and Linear Technology, have lowered their fourth quarter guidance, partially as a result of what happened in Washington.
Companies are "setting the table," said FactSet senior earnings analyst John Butters. Bringing up the government's potential impact now allows management to say "Look, we pointed this out as a potential concern early in the quarter, and now it's happening."
Only a few companies have blamed third quarter weakness on Washington, and with good reason—the shutdown started on Oct. 1, just after the quarter ended.
But after Citigroup missed earnings expectations, CEO Mike Corbat included the D.C. situation on a laundry list of problems, saying on the earnings call that "our results reflect a challenging operating environment, including the slowdown in client activity based on uncertainty regarding Fed tapering, concerns about the effect of a U.S. government shutdown, and forecasts for slowing economic growth, particularly in the emerging markets."