SALT LAKE CITY — As of midnight, the U.S. government has officially entered a shutdown, halting funding to federal agencies. While critical public safety services will continue, questions about the broader implications of this political gridlock are now swirling. Financial contributor Spencer Nelson explained how the government shutdown could ripple through the economy and what will affect everyday Americans.
Duration Matters
Nelson emphasized that the length of the shutdown will determine its overall economic impact.
“If it’s one, two, three days, even up to a week, it’ll have a very minimal effect on the overall economy,” he said. “ But, it will have specific effect towards government employees or government contractors and their pay throughout the duration of the shutdown.”
He warned that prolonged shutdowns, like the 35-day closure in 2018, can start to affect the overall economy.
Immediate Impact on Federal Workers
The first to feel the effects will be federal employees and contractors.
“If you are an essential or a non-essential or a government contractor, obviously your pay is going to stop,” Nelson said. “ The non-essential will stop working, so it directly affects their pocketbook.”
He explained that reduced spending by government workers will affect local businesses.
“It … trickles down to grocery stores, gas stations, and those people won’t be spending money during that time,” he said.
Investor Uncertainty
The uncertainty can have an effect on investors and public markets as well.
“There will be a little bit of volatility in public markets because of that,” Nelson noted.
Planning Ahead for Service Disruptions
Nelson advised everyday Americans to anticipate delays in government services.
“If people are needing passport services or certain things like that, it’s probably going to be smart to get ahead of that,” he said.
Reduced staffing will slow processing times for many federal services.
“ I wouldn’t let it affect anything right now, but pay attention to how long this thing lasts,” Nelson recommended
Be Financially Prepared
For those affected, Nelson stressed the importance of emergency savings.
“The best thing that you can do is always start working towards having three months of living expenses saved in a savings account or a high yield savings account.” he said.
Nelson said it’s really important to have a financial cushion so situations like this don’t shake you or disrupt your lifestyle.
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