Shutdown hits local businesses across U.S., from construction to coffee shops
By Rachel Layne, Irina Ivanova
/ MoneyWatch
The economic impact of the partial federal government shutdown is already seeping into the private sector, with small businesses across the country — from construction firms to restaurants to craft beer makers — saying they are feeling the pinch. As the impasse between President Donald Trump and Congressional leaders over funding a southern border wall enters its fourth week, business owners who rely on government customers are beginning to feel like collateral damage.
Mowa Haile, owner of Sky Blue Builders in Denver, was forced to stop work on several projects for the General Services Administration, the federal agency that handles office procurement and projects. That's meant laying off eight carpenters and a superintendent at the 50-person firm. In a competitive job market for skilled labor, Haile is worried he'll lose those employees by the time government reopens. And he's already considering cutting four or five more workers as the impasse continues.
"We have these contracts, but we can't do any work because the clients aren't there to manage the work," Haile, a married father of two, told CBS MoneyWatch. "We can't afford to keep nine people busy."
Beat the economic clock
Every two weeks of a federal government shutdown trims 0.1 percentage points from U.S. economic growth, Bank of America economists wrote in a note this week, adding that more "drag" is likely as spending and investments are delayed and cautious companies hold tight to their cash.
If an impasse continues into March, "funding lapses for food stamps could materially impact personal consumption and the cumulative drag from the shutdown could meaningfully cut growth" in the U.S. in the first quarter, the economists wrote. Some of that could be made up if government reopens and federal workers get back pay as has happened in past shutdowns, the economists noted.
At the Ascension Annex coffee shop, around the corner from the federal building that houses the Environmental Protection Agency in Dallas, baristas are already feeling the pain.
"I know for a fact that regulars we see all the time, we haven't seen them. It definitely affects us directly," barista Kioan Yare told CBS affilliate KTTV in Dallas-Fort Worth. "A portion of our income is tips-based. So when we don't have the same amount of people coming in, we can't look forward to the same spending habits that we normally have."
Beyond D.C.: Federal jobs are spread all over
The shutdown began Dec. 22, with some 800,000 federal workers across the country furloughed or working without pay and thousands more federal contractors temporarily out of work. Notwithstanding the high concentration of workers in the Washington, D.C., metro area, the bulk of federal employees live and work far outside the nation's capital.
Relative to population, federal jobs are as common in Alaska, Montana and Wyoming as they are in Maryland and Virginia.
Municipal bond-rating agencies like Fitch Ratings and Moody's Investors Service this week struck slightly cautious notes, both citing the potential impact on local economies where there are high concentration of federal employees, like in the Denver area.
"People will cut back on things, but unless you're talking about something that's going to be meaningful for sales tax revenues, or income tax revenues on a federal basis, that's not something that we are worried about," Amy Laskey, managing director at Fitch, told CBS MoneyWatch.
The big worry, she said, is when federal debt levels reach the ceiling authorized by Congress, expected sometime this summer. An extended shutdown from any Washington fight over raising that ceiling could hurt the nation's credit rating, she wrote.
Still, Moody's analyst Rebecca Karnovitz wrote in a note, cities and towns "are already losing sales tax revenue, while retailers and food service companies are losing business because federal workers have cut their discretionary spending."
A longer shutdown could spread into debt markets "as some cash-strapped federal employees are unable to make loan payments" on mortgages or auto loans, she wrote. The impact may be small as some lenders might grant forbearance "until the borrowers receive back pay."
No bourbon for you
Even workers looking for a new variety of stiff drink may be out of luck: The Alcohol and Tobacco Tax and Trade Bureau is shut until the funding impasse is over, which means local breweries, wineries and distilleries can't get approval on certain new unreleased products.
Dave Colt, cofounder of Sun King Brewery in Indianapolis, told CBS's WTTV that production for an agave-based spirit from the firm's new distillery will probably end up on hold.
"So when we manufacture it in February we're gonna have to sit there and wait," Colt said. "If you look at that retail, that's $25 to $30 a 750-milliliter, and we're talking about cases and cases and cases of sales potential."
The brewery also has a new bourbon awaiting approval, he said. "It's not only affecting us, it's affecting every distillery in Indiana and across the country," Colt said.
Back in Denver, where Sky Blue Builders typically performs about $20 million of work annually, with about half from federal contracts, Haile said he's able to execute work from the the fully funded Defense Department. But Sky Blue Builders is still owed about $175,000 for federal work done in December, even though he submitted the invoice just before the shutdown.
Federal project managers told him they had no idea when Sky Blue Builders might be paid. And Haile estimates he can't start another $600,000 worth of work because there's nobody around to approve it.
"The cash flow in the construction industry is intensive, you expend money and by the time you get that money back, it's 60 days [later]," Haile said. "These situations leave you in limbo. We have good financial wherewithal, but not enough to keep all those folks and sustain that. We have to make those tough decisions."
First published on January 11, 2019
© 2019 CBS Interactive Inc.. All Rights Reserved.
CBS News announces 2020 campaign digital journalists
The network presents its 2020 presidential campaign digital journalists and associate producers
updated 6M ago 
Shutdown hits small businesses across U.S.
Fewer tips, construction delays, product-approval hold-ups — all mean less local spending by Uncle Sam
updated 1M ago 
Jayme Closs: "48 Hours" special to focus on the disappearance and return of Wisconsin girl
A look inside the Closs case, the extraordinary stories of other children found, and the the heartache of families with children still missing
updated 16M ago
Pictures tell story of government shutdown
A look at some of the compelling images of the partial government shutdown, which is about to enter its fourth week
updated 23M ago 
GoFundMe "Trump Wall" campaign to refund all donors
Brian Kolfage raised more than $20 million on the website to build a wall along the southern border
updated 3M ago
CBS News announces 2020 campaign digital journalists
The network presents its 2020 presidential campaign digital journalists and associate producers
updated 6M ago
Shutdown hits small businesses across U.S.
Fewer tips, construction delays, product-approval hold-ups — all mean less local spending by Uncle Sam
updated 1M ago 
GOP Sen. Tim Scott slams Republicans for silence on racism
Scott, the only African-American Republican in the Senate, was responding to comments Rep. Steve King made about white nationalism
1H ago 
Trump holds off on threat to declare national emergency
"What we're not looking to do right now is national emergency," President Trump said in a roundtable discussion on border security
updated 35M ago 
Thousands of migrants in legal limbo amid multi-year court delays
The cases will be added to a record-high backlog of over 800,000 immigration cases
updated 6M ago 
Tributes pour in after tearful Andy Murray announces retirement
"The pain is too much, really, and I don't want to continue playing that way," the tennis champion said at a press conference
updated 31M ago 
U.S. lawyers "paying attention" as female Saudi activist due in court
Human rights activist Israa al-Ghomgham could be the 1st woman ever sentenced to death for nonviolent protest in Saudi Arabia
2H ago 
Poland arrests Chinese businessman on spy charges
Internal Security Agency detains 1 Polish along with man reported to be an executive of telecom giant Huawei
7H ago 
U.S. Syria withdrawal officially underway, expected to take 3-4 months
Small convoy reportedly pulls out amid confusion over Trump administration's plans, and intense pressure from Turkey
5H ago 
Myanmar rejects appeal of jailed journalists who claim set-up
Court upholds 2 Reuters journalists' widely condemned 7-year sentences, renewing doubts over Aung San Suu Kyi's "commitment" to democracy
11H ago 
Behind the scenes: Making of "Hamilton" in Puerto Rico
The performances are part of a three-week run to raise money and awareness for the U.S. territory after Hurricane Maria devastated the island in 2017
2H ago 
"Criminal Minds" ending after season 15
"A moment of silence please," one fan tweeted after hearing the news
3H ago 
Lin-Manuel Miranda: Puerto Rico needs "debt forgiveness" to recover
The "Hamilton" creator said the storm-battered island needs more investment from Congress
2H ago 
Lin-Manuel Miranda's 8th grade teacher brings him to tears
"Dr. Herbert's the reason I'm sitting here talking to you," star of "Hamilton" says
5H ago 
R. Kelly's estranged daughter speaks out
"The same monster you all confronting me about is my father… I grew up in that house," Buku Abi wrote in a long Instagram message
6H ago 
SpaceX launches final set of Iridium satellites
A SpaceX Falcon 9 rocket takes off with a final set of 10 Iridium NEXT communications satellites
3H ago 
Lawmakers demand answers from data providers over sale of location data
A report finds T-Mobile and other providers sold data to third parties
20H ago 
Emissions rise despite support for green energy
Most Americans say they support renewable energy, but what will it take to get there?
20H ago 
Senator wants law that could jail tech execs for tracking users' location
The proposal comes as the makers of the Weather Channel app are accused of marketing the locations of its users without their knowledge
Jan 10 
101-year-old inventor has plan to battle climate change
Charlie Bliss and his 81-year-old business partner are known as the thermodynamics duo
Jan 9 
Want to prevent deadly diseases? Eat more fiber, study says
A new report shows that lots of grains, vegetables and fruit lowers your risk of dying early from heart disease, cancer, and other deadly diseases
2H ago 
More than 6 million have gotten flu so far this season
The CDC has released its first estimates for this year's flu season
1H ago 
Norovirus outbreak sickens hundreds on cruise ship
Royal Caribbean's Oasis of the Seas is returning to a Florida port a day early after guests and crew members were hit with an outbreak of norovirus
7H ago 
Starbucks to install needle-disposal boxes in some bathrooms
Move follows complaints by workers worried about potential health risks of cleaning up after drug users
Jan 10 
Patients-turned-friends receive historic triple transplants
Both needed a procedure so rare it had only been done 15 times in U.S. history
Jan 10 
Shutdown hits small businesses across U.S.
Fewer tips, construction delays, product-approval hold-ups — all mean less local spending by Uncle Sam
updated 1M ago 
Shutdown could hit federal workers' credit scores
Federal workers are scrimping to avoid being dinged by lenders for missing payments and damaging their credit scores
1H ago 
Stock markets pause five-day winning streak
Investors have been buoyed this week by signs of a U.S.-China thaw and a dovish turn by the Federal Reserve
5H ago 
A “do-over” chance for Medicare open enrollment
You have until March 31 to change your choice of Medicare Advantage plan or switch to original Medicare
6H ago
Poland arrests Chinese businessman on spy charges
Internal Security Agency detains 1 Polish along with man reported to be an executive of telecom giant Huawei
7H ago 
Jayme Closs: "48 Hours" special to focus on the disappearance and return of Wisconsin girl
A look inside the Closs case, the extraordinary stories of other children found, and the the heartache of families with children still missing
updated 16M ago 
"Baby's turning blue!": 911 call reveals moments vegetative patient gives birth
A patient at a long-term care facility gave birth in December, even though she had been in a vegetative state for a decade
1H ago 
Jayme Closs kidnap suspect concealed his identity, police say
Alleged captor of 13-year-old Jayme Closs identified as 21-year-old Jake Thomas Patterson
1H ago 
Body found in search for baby after staged abduction, affidavit says
Police in San Antonio previously said the family of King Jay Davila faked his abduction to cover up foul play
4H ago 
Rescued girl was target in abduction that left parents dead, police say
Jayme Closs found alive after disappearing the day her parents were murdered in October
updated 0M ago
