4 Economic Areas Hurt by Government Shutdowns

The Federal Government shutdowns, like the record-breaking one that occurred earlier this year, can have some serious effects that ripple across the nation’s economy and impact a variety of industries. Not only do the 800,000 government workers go without pay but have to worry about being unable to pay their mortgages, rent or other bills, but many other areas of the economy come to a standstill. Below we explore four industries that also feel the pressure whenever the Federal Government closes its doors.

Airlines

According to the Delta Airlines CEO, this year’s shutdown cost the airline around $25 million in business. This is due to the reduction of business from fewer government employees traveling for work as well as long lines and delays in airports because of TSA workers not coming into work since they’re not getting paid. The shutdown also slowed down the certification of new airplanes, as the FAA is in charge of processing those approvals.

Agriculture

The agriculture industry also faces the effects of shutdowns firsthand, as farmers are dependent on federal loans and subsidies to finance their next growing season. With local Farm Service Agency offices closed around the country, farmers are unable to work out their financing options for seeds, land and other necessary supplies. They also don’t have access to federal market reports to help them decide which crops to plant and how much land to devote to each one. Without access to USDA loans and information, the shutdown left thousands of farmers with their hands tied during one of the most crucial times in the year for agriculture, the planning and pre-planting season.

Supply Chains

According to Avetta Contractor Management, supply chains are the lifeblood of almost all industries across the nation, including food distribution. The most recent shut down slowed data processing and increased supply chain risk for food suppliers. The health of supply chains is dependent on many different data points from both the public and private sector, but a shutdown of certain federal offices can greatly impact distribution. The FDA has greatly reduced or suspended food inspections, affecting the safety of the food being distributed. The Department of Transportation and the Federal Maritime Commission have also paused many of their services, including data tracking and logistics. Without this crucial information, the US supply chain falls behind the longer the government is shut down.

Small Business

Small business owners are also feeling the heat, as some operations are dependent on approval from government agencies, like the FDA, and others depend on business from government workers. Restaurants and other local businesses that would be frequented by government workers, both in DC and elsewhere, are losing money that they won’t be getting back. Fundbox describes how breweries were affected too, as they need approval from a shuttered government department to roll out new beers. The longer a shutdown goes on, the more money these small businesses lose.

After experiencing the longest government shutdown in the US’ history this year and feeling the economic effects of bad decision making in Washington affecting millions of Americans, all we can hope for is that we won’t have to face another shutdown any time soon.

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