The Shutdown Effect

January 22, 2019
Black and white photo of US Capital with the word CLOSED overlaid.
The lasting effects of a prolonged shutdown are still unknown.

 

Regardless of the fact that the government will not stay shut down forever, many analysts are asking whether the shutdown might have a significant negative influence on the economy in the short-run and even some repercussions going forward. Even though back pay will be taken care of, the fact that almost a million workers went without pay for a significant period of time not only has had a deleterious effect upon individuals, but there is a cumulative affect that will reach beyond the workers themselves. 

For example, in the real estate industry, there are lenders and landlords who will be receiving late payments. This will cause higher delinquency rates in addition to higher costs. Some buyers may have been delayed in purchasing homes during the shutdown and that means that sellers may have had to delay their plans. Retailers and other service professionals that do business with these workers may have been affected. Farmers are not receiving payments that are designed to off-set the negative effects of the trade war. Even businesses near government tourist attractions such as the National Zoo and museums have felt the pinch.

For those who are affected by the shutdown, this feels like a natural disaster. Only, instead of rebuilding homes after a flood or fire, they are actually rebuilding credit and certain parts of their lives. Will we see a temporary drop in economic growth due to the shutdown? That remains to be seen. However, we can be sure that we will see another drop in confidence in our leaders' ability to come together and find solutions to the problems we face today.