Upstate New York to see minimal impact from govt. shutdown
The stalemate in Congress that led to the first government shutdown in 17 years has continued Tuesday morning. The Democrat-controlled Senate voted for a fourth time to reject a budget bill from the Republican-led House that seeks to undercut Obamacare.
Upstate analysts are saying the shutdown could last for weeks, as the two sides seem unlikely to reconcile their differences any time soon.
“I think it will be at least two weeks or so, based on statements I’ve heard this morning from Capitol Hill,” says Mark Zupan, Dean of the Simon School of Business at the University of Rochester.
“I don’t see people right now being willing to sit down at the table, they’d rather create more blame for the other side and then hope that generates into a positive result at the next election.”
But, Zupan says the impact in upstate New York should be marginal.
“I think it will be fairly minimal, just like with the sequester we haven’t seen that dramatic of an impact,” Zupan says.
He says the bigger issues will stem from uncertainty in the markets as Congress works to resolve the stalemate.
“The last time we had a government shutdown it was about a 3.5 percent decline, but the market recovered after the government restarted. So it’s the temporary introduction of uncertainty, will the government be able to deal with its fiscal situation? That will probably be the largest impact.”
Zupan says the main impacts that will be felt by locals in the upstate area will occur if they have retirement accounts contributed to by the federal government, or assets in the financial markets.
Of course government employees may also face furloughs without the assurance of back pay when they return to work.
Zupan says there are likely to be some surprises in terms of what services are kept running, and which ones are halted as the shutdown unfolds.
“I think which positions do get furloughed, scaled back near term, that will continue to be an evolving process. We’ll get surprises as this evolves, whether it’s the Smithsonian, or IRS audits, we’ll see things like that pop up over the next few days.”
Zupan also says confidence in the US dollar is likely to take a hit on the international markets.
“There will be a loss of confidence. That was reflected by the change in the dollar to other currency exchange rates, but I expect a bounce back once this gets resolved.”
The last time a government shutdown occurred was during the Clinton administration, the impasse lasted for 21 days.