Impact of government shutdown spreads across economy

“The shutdown is stifling our ability to grow,” said Grant Richardson, who founded a wine import company, Pangea Selections, in 2019.

Richardson can’t get close to a six-figure small business administration loan while the federal government is paralyzed, but the impasse has given him no reprieve from the roughly $20,000 in tariffs he expects to pay out this month.

The Austin, Texas, entrepreneur is still waiting to receive about $10,000 in business tax credits for the quarter. And he can’t make a deal with a California winemaker to launch a new product line because the government won’t approve new labels for bottles during the funding period.

“The government is still taking money from us, but they are not paying what they owe,” he said, referring to tax credits.

The shutdown froze many key government functions, such as lending and processing tax credits. And now, without pay, hundreds of thousands of federal workers across the country have cut spending, creating economic repercussions.

From restaurants in Washington DC to businesses located around national parks, the impact of the shutdown is spreading across the entire US economy, with no relief in sight.

Sean Han, chef manager of Market to Market, a cafeteria at the Ronald Reagan Building in Washington, said foot traffic has been down about 20 to 30 percent since the government shutdown began — during an already difficult year due to massive layoffs at the federal level.

The company has not yet reduced its employees’ work hours, he said, but that could happen — in addition to the possibility of layoffs — if the shutdown continues. With fewer customers, Han said he asked workers to focus on providing a better dining experience for everyone who comes.

“We’ve been around for about 20 years, so we’ve seen this before,” Han said. “But it took us nine months to recover from the pandemic and we will have to rebuild again once it is over.”

Restaurant reservations in Washington were down 9% last week compared to the same week a year earlier, according to OpenTable data.

In North Carolina, Pam Anderson cares for only a handful of dogs at her Ocean Sands K-9 Resort in Kill Devil Hills.

Some of his local clients have canceled or shortened their vacations because the standoff has affected national parks, or because they are federal employees who are not getting paid. At the same time, she’s not getting any bookings from tourists, which she says is due to the closure of the famous Wright Brothers National Memorial.

Just this week, a local family who planned to leave their two dogs with them for a few days in mid-November pulled out, costing them $500 in lost income. The couple works for the federal government.

Although the kennel had a “busy September,” bookings are down 40 percent for October and 60 percent for November compared to last year, causing Anderson and her husband to tighten their belts. They have stopped going out to dinner a few times a week and are suspending their charitable giving.

“I told my husband the other day, ‘Don’t spend any money,'” said Anderson, 70, who is considering getting a night job.

Last March, restaurateur Fran Bolden opened a cafeteria at Redstone Arsenal, a U.S. Army base near Huntsville, Alabama. It was a profitable side business for Bolden in a city whose economic lifeline are the military, defense and aerospace industries.

But that restaurant, Arsenal Eats, is now closed until the government reopens. Bolden said they typically expect about 150 people a day for breakfast and lunch; the last two weeks there have only been between 25 and 30.

“The volume just isn’t there,” she said.

Businesses in downtown Huntsville and beyond are feeling the effects, she said, and small businesses are bearing the brunt.

“The local economy is that of a military town. With people not going out, not spending money and not knowing what to do – we rely on these people’s business to be able to support ourselves,” Bolden said.

Over the past two years, toddlers at the Bernard Jackson Swimming and Wellness Center in Washington, D.C., learned to float for the first time, and seniors in their 80s practiced gentle exercises to stay strong.

But the closure had serious consequences. With fewer families able to afford classes and rising operating costs, Jackson has had to make difficult choices just to keep its doors open. Many of its clients are federal employees directly affected by the wage gap.

“Because people aren’t getting paid, they’re not coming to their classes,” Jackson told CNN as he left an unemployment center.

“I can tell you that at least 40% of my income has decreased.”

Even though attendance is down, Jackson is finding ways to support his customers. He continues to send them instructions and exercises to practice at home.

“The pool is still open,” he said.