Businesses Already Feeling the Effect of Government Shutdown

The Federal Government effectively shutdown operations beginning Tuesday, October 1, 2013, and by the end of the day the shutdown was already affecting businesses.  Due to the budget stalemate in Congress, many agencies were left with no money to operate and were forced to furlough approximately 800,000 federal workers nationwide.  These cutbacks in services and closure of national parks and monuments not only impacted those who were furloughed, but also resonated into the business world.

The government’s E-Verify system that allows employers to verify that a new hire is legally allowed to work in the United States went offline on Tuesday.  The Small Business Administration also ceased the processing of applications for new business loans.

The housing market is taking a hit as well.  The Federal Housing Administration which insures about 26% of new single-family home purchases sent many of their employees home.  This closure will make it hard for first time home buyers who are looking to be approved for an FHA loan.   Also lacking are recent statistics that home builders, realtors, and others were waiting for regarding the current trends in the housing market.

The Federal Reserve may also feel the effect of the shutdown if it lasts longer than Friday, as this is when the monthly report on job creation and unemployment is scheduled for release.  The Federal Reserve (one of only a few government agencies still operating due to not being dependent on congressional appropriations) needs the information on the labor market, as this is central to making the decision on a key stimulus program.

Many private small businesses are also feeling the effects.  Those businesses that rely on the tourism of national parks, such as hotels and restaurants, are already beginning to feel a pinch by having to decrease work hours for staff.

To read more about the effects of the government shutdown on businesses, please visit

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