The Shutdown Impact Is Spreading

“I can guarantee you that every small-time retailer like Paloma is pulling their hair out,” says a small-time retailer.

Good Morning!

Here are today’s highlights:

• Employees put the value of being able to work remotely at about $11,000 a year, according to Gusto.

• Gene Marks finds an AI app that he believes is actually generating ROI.

• Chris Campbell doubts you can open a restaurant in New York City for less than $200,000.

• Craft brewers were so passionate about their craft that they lost sight of economic reality.

THE GOVERNMENT SHUTDOWN

The shutdown is squeezing businesses across the country: “Small government subcontractors such as Brian Butler’s marketing-and-communications firm said they are already being hit and don’t know when they will be paid for some work done or how long the shutdown will last. ‘That’s a very scary place to be in as an entrepreneur,’ said Butler, whose Lutz, Fla., firm, Vistra Communications, employs about 80 people and gets roughly three-quarters of its revenue from the federal government. Butler laid off five of his 80 employees last week after the shutdown triggered a stop-work order on one of its projects. Butler paid the workers a week of salary and is covering the employees’ share of health-insurance costs for the month.”

• “The shutdown is disrupting business as usual in many ways—and reinforcing just how many private-sector operations depend on a federal bureaucracy humming on all cylinders. Government-backed small-business lending has ground to a halt. Agencies can’t award or make payments on many new contracts. Scheduled workplace-safety inspections are on hold and so are many regulatory reviews.”

• “Businesses that don’t work directly with the federal government are also bracing for a pullback in spending as the shutdown continues. ‘We know from past experience that we will see lower sales than we would have as long as the government shutdown lasts,’ said Mike Roach, co-owner of Paloma Clothing, a 50-year-old women’s clothing retailer in Portland, Ore., with about 20 full- and part-time employees. ‘When consumers are less confident, they spend less money.’”

• “The shutdown’s timing makes things more precarious. Many retailers depend on higher fourth-quarter sales to stay solvent. ‘I can guarantee you that every small-time retailer like Paloma is pulling their hair out,’ Roach said.”

• “Some economists worry the pain could spread to the broader economy if the stalemate stretches into weeks. The shutdown could cut annual economic growth by as much as 0.2 percentage point for every week it lasts, the consulting firm Oxford Economics estimates. Much of that should be recovered when the shutdown ends, assuming the government makes good on delayed invoices and back pay for furloughed workers.” READ MORE