How a Government Shutdown Could Impact Your Finances
- Author: Shaun Jerde
- Posted: 2024-06-28
The threat of a federal government shutdown looms as Congress scrambles to pass a budget and raise the debt ceiling by December 16.
While shutdowns don't directly hurt most Americans, they can have indirect effects on your finances.
With no approved budget, many federal agencies and services deemed "non-essential" would temporarily close. This means around 800,000 federal employees would be furloughed or forced to work without pay.
Services like national park access, small business loans, and IRS customer support would pause. While the shutdown itself may be temporary, the impacts on jobs and the economy could linger. Here's how it could affect your money:
Lost Wages for Federal Employees
During the 2018-2019 shutdown, around 380,000 federal employees were furloughed and 420,000 were required to work without pay.This meant missed paychecks for those living paycheck to paycheck.
While federal employees are usually paid retroactively, it can take weeks or months to receive back pay.
Delays in Tax Refunds, Mortgages, and Other Services
With IRS staff furloughed, tax refunds and government-backed mortgages could be delayed.Small business owners waiting on government loans or grants would also face slowdowns.
Passport processing and Social Security applications could take longer.
Halts in Government Assistance Programs
Programs like WIC, food stamps, and housing assistance are unlikely to stop immediately.But funding could cease after several weeks, leaving low-income families without this critical support.
Impacts on Consumer Confidence
Shutdowns signal government dysfunction, shaking consumer and investor confidence. This can slow economic growth and spending.The 2013 shutdown subtracted an estimated $24 billion from the economy.
While the pain won't be felt immediately, an extended shutdown could impact jobs, government services, and the economy. Let's hope Congress acts swiftly to avoid significant disruptions.