The federal government shutdown won’t be an economic Armageddon for Connecticut, but that shouldn’t provide much solace to businesses.
The shutdown will certainly slow economic growth: If it lasted a month, it could cost the state 2,000 jobs and $100 million in income, according to one UConn economist’s estimates. But that will only deliver short-term pain. There is a much larger, long-term issue at stake. Since 2008, Connecticut businesses — and many across the country — have been operating with dark clouds hanging over their heads.
If there is one thing every business owner will tell you they’d like from their local, state and/or federal government it’s a predictable business climate. Unfortunately, it’s tough to remember the last time one existed for Connecticut firms.
Since the 2008 financial crisis, Connecticut has faced extremely difficult economic conditions. The recession itself wiped out 121,000 jobs, only half of which have been recovered. The state budget faced a historic deficit that was plugged by the largest tax increase in Connecticut history. The federal health care reform law made sweeping — and complicated — changes to the way employers are required to offer health benefits.
The federal government shutdown is just the latest example of more uncertainty being swept up at the feet of employers. Congress’s inability to get a continuing resolution passed to fund the government is inexcusable, particularly when the disagreement centers around political gamesmanship.
But that’s not all. Businesses are also impatiently waiting to see if Congress will allow the U.S. to default on its debt obligations.
There are many people, particularly business owners, who dislike Obamacare. But is fighting to defund the Affordable Care Act really worth taking the entire U.S. economy hostage?
Regardless of the politics involved, what can’t be argued is that this fight in Washington D.C. is only causing more unrest for business owners.
A recent National Federation of Independent Business (NFIB) survey found that small business pessimism grew in September — even before the shutdown began — because of major concerns about future business conditions.
“It’s hard for anyone to view what’s happening in Washington and be confident in the economy,” said NFIB Connecticut State Director Andrew Markowski. “It’s especially hard for small business owners who have to make a judgment on whether to make long-term commitments without knowing whether Washington can deal with the country’s economic and fiscal problems.”
Granted it may be foolish to think businesses will ever operate in an environment of complete economic certainty. In fact, it’s a pretty safe bet that won’t happen.
We live in an age where new technology is changing the playing field across all industries on a continual basis. Firms that can’t adapt will certainly go extinct. Those pressures and challenges, however, come with competing in a free market economy.
What shouldn’t be normal, or acceptable, is for lawmakers to continue to create an uncertain business environment simply because they can’t agree on…well, anything. This federal shutdown won’t send Connecticut back into an economic recession, but it will slow job growth for the rest of the year. Worse yet, it will darken Connecticut’s economic storm clouds, just as they were letting in some rays of light.
