3 min
How Could the Government Shutdown Affect Consumers? LSU Marketing Behavior Expert Dan Rice Offers Insight
Some interesting areas that I’ve seen in the press: "Consumer Sentiment was measured at the 7th lowest point (55.1) since its inception in 1952, yet we’re not seeing a huge decrease in spending (CNN). Part of the argument is the spending is an average measure and really wealthy consumers are not feeling the pinch and spending like normal or moreso, while less financially-well-off-individuals are pulling back their spending (Spectrum Local News). Presumably, the shutdown doesn’t help that figure. In terms of consumer groups affected, let’s look at government workers first. An article by the BBC claimed roughly 750,000 “non-essential” federal workers could be furloughed without pay. This means that many to most of those are going to struggle with paying for the necessities and this becomes more and more of a strain the longer the shutdown wears on. Furloughed Workers: Most furloughed workers are required to be paid back pay when the shutdown is over by law. That could in some ways create more purchases in the future if they can’t be bought currently, but could also lead to things like more credit card debt as people can put charges on a credit card to pay back later. While from a consumer psychology standpoint that might make sense, but it’s a very risky practical strategy. Gov’t contractors don’t get the same guarantee. Businesses that rely heavily on such groups (e.g., in a town where many fall into those segments) might suffer or shutter. This means other consumers that frequent those establishments have their routines disrupted , and force them to find other providers. Essential Workers: Then we have the group of “essential” workers that must go to work and still not be paid, Air Traffic Controllers, The military, TSA Agents, certain law enforcement groups, etc. that all might draw back spending with no immediate income. That can cause major issues for retailers and producers, which could lead to more layoffs in the private sector, putting more consumers into financial straits. If you’re someone that likes to visit national parks or zoo’s like the National Zoo, or the Smithsonian Museums (which has claimed they’ll have funding at least through October 6th), you could be disappointed to have reduced accessibility or outright closures due to the shutdown, again according to the BBC. Healthcare: Healthcare could definitely be affected, particularly for those on Medicaid and medicare (i.e., the elderly and poor). So if you view medical services as consumer good, then there will be issues there as well (increased wait times, decreased satisfaction, etc.), which is likely to add apprehension and anxiety to many consumers. Travel: If you’re a traveler, staffing shortages in the TSA and Air Traffic Controllers could lead to significant travel delays, which could disrupt leisure or business plans, or force people to cancel plans altogether. If you’re traveling abroad getting your passport updated could take longer. All these things (and many more) may happen or not depending on the length of the shutdown and the severity of the furloughs. Those in better financial positions will suffer less, while those already in less desirable financial situations might find that delays in some of their normally federally funded services (e.g., SNAP, WIC, etc.) create even bigger issues."
