Economic Impacts of Federal Government Shutdown Are Widening as Impasse Continues
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Economic Impacts of Federal Government Shutdown Are Widening as Impasse Continues


As the United States Federal Government shutdown wears on with opposing sides at a stalemate, the negative effects are becoming more apparent and far-reaching with each passing day. Many government services have been curtailed, thousands of federal workers have been furloughed or are working without pay, and parks, museums and other public landmarks are closed.

 

The economic impact is widening, says, David Fiorenza, an economist at the Villanova School of Business.

 

“Federal workers, who are paid bi-weekly will be without pay until this shutdown ends. They will eventually receive back pay," says Fiorenza. But, the the potential for economic hardship could increase the longer the shutdown lasts.

 

Another casualty of the shutdown, he added, is tourism – both close to home and across the country.

 

“Most of the federal buildings that would be open for tourism, for example, the Constitution Center in Philadelphia where the Liberty Bell is housed, are closed. This affects those who came from other areas of the country or internationally to visit and learn about our government's history,” Fiorenza noted. “This kind of negative publicity could have an impact on tourism in all cities where there are federal buildings or federal parks.”

 

An economic ripple effect is starting to reach businesses that cater to tourists and those that provide services to federal workers now furloughed or working without pay.

 

A case in point, says Fiorenza: federal workers who are employed at the Smithsonian Institute or the National Zoo “will not be buying their breakfast, lunch, or going out to eat after work due to the shutdown. This has a multiplier effect on cafes, diners, restaurants that rely on these workers in Washington, DC.”

 

In the meantime, most cities, states and counties will be completing grant applications, applying for assistance for various services and looking for aid for various services, says Fiorenza.

 

“I do not see any interruption in municipalities or school districts receiving funding, but if this shutdown continues past January I have a concern there will be a backlog and delay in federal funding or aid distributed to the states and municipal levels.”

 

Being in a state of governmental limbo does, however, have a silver lining, according to Fiorenza.

 

“Federal spending has slowed down. The annual federal deficit has slowed and overall debt has stayed constant. At the same time, federal tax revenues continued to be collected from individuals and corporations.”

 

To speak with Fiorenza, click his headshot above, e-mail mediaexperts@villanova.edu or call 610-519-5152.


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