According to the Wall Street Journal, many U.S. businesses are currently struggling due to the ongoing government shutdown. It started on October 1, after Democrats blocked a GOP spending bill on September 30, leading to a funding halt.
Since the shutdown, various U.S.-based companies are facing significant challenges. This includes disruptions in government-backed loans for small businesses and layoffs, as reported by the WSJ. Agencies have stopped issuing new contracts and postponed important workplace safety inspections, alongside halting regulatory reviews.
Some small subcontractors are understandably anxious about the duration of the shutdown and how it will affect payments for work already completed.
Brian Butler, who leads Vistra Communications in Florida, expressed the gravity of the situation, noting, “That’s a very scary place to be in as an entrepreneur.” Recently, he had to let go of five employees after a stop-work order impacted one of his projects. To soften the blow, he’s been covering one week’s wages and their health insurance for this month, although he worries about sustaining that if more orders are halted.
Didi Azaria, the CEO of Workiz, highlighted that around 40% of sales for their customer base come from commercial or government accounts and that they are encountering increasing delays due to the shutdown. “Every job is getting delayed, or they’re not getting paid on time,” he explained, adding that this leads to cash flow issues that compromise their ability to buy equipment or pay staff.
On a broader scale, National Economic Council Director Kevin Hassett stated that the shutdown could potentially cost the U.S. economy about $15 billion weekly. He shared insights on CNBC, cautioning that prolonged shutdowns could significantly impact the country’s GDP.
California’s Fire Starter Studios usually derives around half of its revenue from federal contracts. Prior to the shutdown, they completed a lengthy process to secure government contracts, costing roughly $10,000. Now, however, CEO Rachel Klein laments, “Now we have nothing to show for it,” voicing concern that a lack of new business will mean no income in the coming months.
Some businesses not directly engaging with the federal government are also worried. They fear that consumer spending may decrease as the shutdown continues. Mike Roach, co-owner of Paloma Clothing in Portland, said based on past experiences, lower sales are almost inevitable during such periods. “When consumers are less confident, they spend less money,” he noted, adding that every small retailer is likely feeling the pressure.
