From a small northwestern observatory…

Finance and economics generally focused on real estate

The shutdown at a micro-econ level

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As the madness of this Federal shutdown continues, the lead news story every day features obvious pain and suffering faced by hundreds of thousands of government employees, an unknown (but probably much larger) group of federal contract workers, and the general citizenry who depend on those government workers.  Compared to the very real problems this is causing so many hard-working Americans, whining about the real estate industry, and business in general, may seem to be superfluous.  That said, the economy as a whole — and by that I mean working people, their jobs, their savings, and their lives, will be impacted for quite some time by this stupidity at the highest levels of our government.

A few random points, just to illustrate:

  1.  Local schools depend heavily on Federal support for school lunches.  Even schools with few students receiving free lunches will receive significant dollars each month to subsidize the school lunch program.  This money immediately trickles into the local economy to pay for food and cafeteria salaries.  Interrupting this for even a short period of time can really impact school districts that already have problems paying teachers and providing school supplies.
  2. Many Federally-produced business reports, which are necessary for business intelligence and decision making, have been delayed.  For example, the international trade report was not released last week, as was the January 11 agricultural supply/demand report.
  3. JP Morgan lowered its GDP growth estimate by a quarter of a percentage point.  That may not sound like much, but it represents a materially large impact on our economy and its ability to provide private-sector employment.
  4. Mass transit systems throughout the US — on which many workers depend for their daily commute — have temporarily lost financial aid that supports maintenance and repair costs.
  5. Federal courts are increasingly having to delay or defer litigation, including almost all civil cases.
  6. Cyber security at many Federal agencies is handled by outside contractors, who are not being paid and thus legally cannot provide those services.
  7. College students applying for student loans cannot verify parent income through Federal sources.
  8. Department of Agriculture loans to farmers and rural dwellers are on hold.
  9. Wildfire prep work and firefighter training, a needed preparation for the 2019 fire season, are on hold.
  10. The FCC, which licenses and regulates TV and radio, plus private radio licenses (such as the radio in an airplane or a boat) has shut down.
  11. The Federal government missed paying its $5 million monthly water bill to the District of Columbia.
  12. IRS staffers cannot answer consumer questions about the new tax law.
  13. Employers cannot use the Federal E-Verify system to check if workers are in the US legally.
  14. The National Hurricane Center is now off schedule for badly needed upgrades to the main American weather model.
  15. Some states are delaying contracts for road and bridge maintenance.
  16. Mergers and IPOs are being delayed because the SEC cannot issue approvals.
  17. The FDA has stopped many food inspections.



Written by johnkilpatrick

January 21, 2019 at 9:39 am

Posted in Uncategorized

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