The ongoing government shutdown in the United States has so far had a limited economic impact. However, experts caution that the consequences could become more severe the longer it persists.
Federal Employees and Missed Paychecks
A significant number of federal employees will not receive their paychecks this Friday, marking the first full paycheck missed due to the three-week-old government shutdown. While the immediate economic damage is contained, economists warn that prolonged shutdowns can exacerbate financial difficulties for many.
Economic Expert Insights
Economist Brett Ryan from Deutsche Bank highlights the precarious situation for federal workers, noting, “They have mortgage payments to make. They have credit card payments. They got kids’ tuition. Like, everybody’s got bills to pay.” While federal law mandates back pay for these employees once the shutdown concludes, uncertainty from the White House has led some workers to curb their spending, affecting businesses they usually support.
Impact on Government Contractors
Government contractors face a different challenge, as many contracts have been suspended without any guarantee of compensation post-shutdown. Bernard Yaros from Oxford Economics estimates that approximately $800 million in contracts are not being awarded each workday the shutdown continues. Small businesses, which account for about half of these contracts, are particularly vulnerable, with potential financial stress leading to furloughs, pay cuts, or layoffs.
Disruptions to Essential Services
The shutdown’s effects extend to critical services such as air traffic control, where staff shortages have already resulted in flight delays and cancellations. This disruption underscores the broader economic implications of the shutdown on daily operations.
Potential Upcoming Challenges
Looking ahead, a significant hurdle looms at the start of next month. If unresolved, the food stamp program, which aids over 40 million people, may be unable to distribute SNAP benefits in November. Yaros warns of the broader ramifications: “That would be a shock, you know, a hit if that goes away.” Such a cut would particularly impact the South and West, where reliance on food stamps is highest.
Assessing the Total Cost
Currently, there is no clear estimate of the shutdown’s total cost. Past shutdowns have proven expensive, affecting both government finances and the broader economy. Complicating matters, many government economists tasked with calculating these costs are furloughed. However, the September inflation report, crucial for Social Security adjustments, will be released on Friday, albeit after a delay.
NPR’s Scott Horsley provided these insights.
Accuracy and availability of NPR transcripts may vary. Transcript text may be revised to correct errors or match updates to audio. Audio on npr.org may be edited after its original broadcast or publication. The authoritative record of NPR’s programming is the audio record.
This article was originally written by www.npr.org
