Business Leaders Warn of Shutdown’s Impact

Republicans haven’t been convinced to reopen the government after seeing the impacts on families across the nation, but maybe they’ll change their tune after hearing from businesses that are also seeing the detrimental impact of the Republican government shutdown. According to the Wall Street Journal:

“As companies begin reporting third-quarter financial results this week, executives are warning that a long-term government shutdown could crimp their businesses, especially if they are close to federal installations or have customers near the poverty line.”

“Scores of companies in nearly 200 public filings have already cautioned investors that their businesses could suffer from the shutdown, in its ninth day Wednesday. Among them: J.C. Penney Co., Family Dollar Stores Inc. and Humana Inc., which all warned this week of the potential bottom-line consequences of broad federal furloughs and agency closures.”

“’Over half of our customers are on…some sort of government assistance,’ Howard Levine , chief executive of Family Dollar Stores, told investors Wednesday. The current and potential economic effects of the shutdown ‘are very real to our customer every day.’”

“In addition, corporate plans for mergers and acquisitions could be put on hold as executives wait for the government to reach an agreement on a new budget and a higher debt ceiling.”

“Every week that the government is closed trims economic output by an estimated $800 million, or 0.08 percentage point for the quarter, according to the economic research firm IHS Inc. ‘If the shutdown drags on,’ it said, ‘the effects will start to add up.’”

“The biggest casualties will be government contractors, aerospace and defense companies and firms, such as pharmaceutical makers, that rely on agencies such as the Food and Drug Administration for approvals. But in addition, companies that serve budget-conscious customers, such as Costco Wholesale Corp., are feeling the impact.”

“And with the year-end shopping season approaching, that is critical, especially for retailers. According to a transcript from S&P Capital IQ, Charles Bergh , chief executive of Levi Strauss & Co., told investors last week, ‘If that is a prolonged [shutdown], that is going to have a market impact, I think, on everyone's business as we cruise into the holiday season.’”

“Stocks had been stoic toward the beginning of the shutdown, but by Wednesday's close the Dow Jones Industrial Average was down more than 2%.”

“Wolverine World Wide Inc., meanwhile, was more specific. Its new risk-factor disclosure cautioned of ‘delays in importing products at U.S. ports, supply-chain disruption and reduced purchasing by the Department of Defense or other military purchasers.’”

Are Republicans listening? Democrats remain ready and willing to reopen the government today. After abysmal polls and stories like this, maybe Republicans will change course soon.