A
look at who is affected, and the potential economic impact.
Provided by Taylor McClish, Financial Advisor
Right now, many households across the country are contending with the
financial pressures resulting from the partial federal government shutdown.
About 800,000 federal workers have been furloughed, and about 4 million
government contractors are now working for free. Besides the interruption of
key services, the closures risk causing a degree of disruption in the economy.1
Nine federal departments have scaled
back operations. The list:
Agriculture, Commerce, Justice, Homeland Security, Housing and Urban
Development, Interior, State, Transportation, and Treasury. (About 240,000 workers
have been furloughed by Homeland Security alone.) Even so, many essential
federal government services are still being provided. The Social Security
Administration is continuing to send out retiree benefits, and the Postal
Service is still delivering mail.2,3
The longer the shutdown lasts, the deeper
its possible economic impact. Kevin
Hassett, who chairs the Council of Economic Advisers, estimates that each week
of the shutdown hurts quarterly GDP by 0.13%. If Hassett is correct, then
first-quarter growth may already be about 0.5% short of federal government
projections. Some analysts think the economy could contract in Q1 if the
shutdown drags on through the start of spring.4
What options do furloughed workers have?
The gig economy beckons, with short-term jobs that can be left behind
with little notice if the shutdown ends. It may come down to driving for
rideshare or meal delivery companies or working as a barista or waiter –
something with a flexible or alternative schedule. Some can find part-time
accounting, editing, or health and safety work. (The New York Times recently noted a turn-of-the-year spike in online
job searches by workers at federal agencies.)4
Of course, some furloughed federal workers are barred from accepting
interim employment. Those not classified as “excepted” or “exempt” cannot even
volunteer while furloughed.3
On January 16, President Trump signed a bill into law to reimburse
federal workers for lost wages when the shutdown ends. Furloughed federal
employees who are receiving state unemployment benefits will have to return
those benefits after they collect their back pay.3,5
As the gridlock continues, these employees and contractors are showing
great patience and resourcefulness. Hopefully, they will not have to cope with
financial anxieties and hardships much longer.
Taylor McClish may be reached at (503) 239-3060 or Taylor.McClish@cunamutual.com
This material was prepared by MarketingPro, Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates. This
information has been derived from sources believed to be accurate. Please note
- investing involves risk, and past performance is no guarantee of future
results. The publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to engage
the services of a competent professional. This information should not be
construed as investment, tax or legal advice and may not be relied on for
avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.
Securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.
Citations.
1 - cnbc.com/2019/01/10/amid-shutdown-thousands-of-federal-workers-file-for-unemployment-.html
[1/10/19]
2 - tinyurl.com/ycmnaqfl [1/1/19]
3 - oregonlive.com/business/2018/12/government-shutdown-2018-will-i-get-mail-what-about-social-security-benefits.html
[12/26/18]
4 - nytimes.com/2019/01/15/us/politics/government-shutdown-economy.html
[1/15/19]
5 - cnn.com/2019/01/16/politics/trump-signs-backpay-bill-government-shutdown/index.html
[1/16/19]