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5 Ways the Federal Government Shutdown Has Affected the Economy

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the federal government shutdown

One estimate by Standard & Poor’s, a financial rating agency, showed that the cost of the latest government shutdown to the economy was $6 billion. Everything from lost productivity – based on federal worker furloughs – to slowed purchasing activity at various businesses plays a role in the final price tag. If you are wondering just how much the federal government shutdown has affected the economy, here are five.

1. Slowed GDP Growth

Although no one knows the exact impact of the shutdown, there was damage to the U.S. gross domestic product (GDP). Quarterly economic growth was likely cut by about 0.13 percent points for each week it carried on. This led to about a 0.65 percent estimated decline since the shutdown lasted nearly five weeks. An estimate also suggested that around 380,000 workers were not producing services that they typically would during the shutdown period.

It is true that GDP growth losses may recover by the second quarter. However, since the government may shut down again if a deal isn’t reached by mid-February, there could be more damage.

2. Household Spending

During the shutdown, about 800,000 federal workers weren’t receiving paychecks. Additionally, individuals who contract with the government but are not official employees may have also seen their wages paused.

As a result, spending changed dramatically for many households. In some cases, people spent less on groceries. They also spent less on gas for their vehicles, and other common categories to increase their odds of remaining solvent during the shutdown. Others tried to negotiate with creditors to get some relief. Unfortunately, many may have to face interest or fees because of non-payment, also impacting their budgets.

When people spend less, the economy feels it. Businesses bring in less money.  Less revenue impacts their profits and ability to pay their bills. Then, it just keeps trickling down. From one company and household to the next.

3. Delayed IPOs

A few high-profile IPOs were planned for the beginning of 2019, including Pinterest, Lyft, and Uber. However, when the government shutdown, the Securities and Exchange Commission (SEC) was only handling emergencies. All pending administrative proceedings were put on hold.

As a result, there was a delay in IPOs, which not only impacts those companies but also the potential investors and the stock market as a whole.

4. Airlines Lose Business

Airlines across the country all saw their pocketbooks becoming a little lighter thanks to the government shutdown. Since federal workers and contractors were mostly furloughed, they weren’t traveling. This resulted in fewer airline ticket purchases.

Similarly, some other travelers may have changed their plans because of the shutdown. Some TSA workers called in sick instead of working without pay, and security lines got substantially longer. Travelers may have decided it was better to delay their travel plans than contend with the nuisance. As air traffic controllers also began calling in sick, other potential passengers may have forgone their original itinerary based on fear as well.

5. Small Business Impact

The shutdown also did a number on small businesses around the country. Along with slower household spending, something that can affect a company of any size. Companies were unable to approve Small Business Administration loans. This may have caused a squeeze on small business owners who needed the money to maintain operations or go forward with a big project.

Similarly, microbreweries couldn’t get approvals of labels from the Alcohol and Tobacco Tax and Trade Bureau (TTB), hindering their ability to get new batches out for customers.

Ultimately, the government shutdown was hard on the economy. The examples above only skim the surface of the full impact, and the true nature of the damage may not be clear for months. Plus, if the government fails to strike a deal by mid-February, another shutdown could occur, making a tough situation potentially much worse.

How has the government shutdown affected you? Tell us about your experience in the comments below.

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Politicians and Personal Finance: An Interview With Senator Don White

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Politicians Saving Money
It’s not every day we get to hear about how politicians handle their own personal finances. Oftentimes we hear about politicians and how they plan to better our pockets through local bills and laws, but we never hear about how they are keeping their own bank accounts healthy. We sat down with Pennsylvania State Senator Don White to bring you a behind the scenes on what a politician’s thoughts on personal finance and saving money might be.

Senator White, who was elected to his first term in 2000 representing the 41st Senatorial District, greatly enjoys public service. “Serving in a political office was never in my ‘plan,’ but I came to recognize the need for me to step forward and offer my talents to help improve the communities I represent,” Senator White said during the interview. Prior to being elected State Senator, White spent some time in a career in financial services.

“Serving in a political office was never in my ‘plan,’ but I came to recognize the need for me to step forward and offer my talents to help improve the communities I represent,” Senator White said during the interview. Prior to being elected State Senator, White spent some time in a career in financial services.

Prior to being elected State Senator, White spent some time in a career in financial services.

Don White

How Senator Don White Saves Money

During his time in the financial services industry, White was able to obtain sound knowledge about what being financially stable means as well as some techniques that help him stay on top of his personal finances. As far as saving money, his method is pretty simple.

“Saving money is a matter of taking the time to ensure what you are spending on is both necessary and the best deal available,” he said. “As with any budget, there will be deviations, but the key is to recognize the means you have and to live within them. When you decide to make a purchase, take the time to make sure you’re getting what you pay for.”

Keep Your Finances Simple

There are a variety of tools you can use both online and offline to keep your savings on track. Politicians saving money is really no different than how you would put money aside at home. Senator White successfully keeps his efforts offline for himself. A key to saving is to choose what works best for you. Unlike many others, White likes to keep things old fashioned when it comes to his money.

“I do not use the Internet,” said the Pa. State Senator. “If you have investments, paying attention to business news is important so you can understand the marketplace and make sure your investments are diverse enough to meet the current environment.”

While he does use them for savings, Senator White does not recommend using bank accounts as an investing tool due to the current state of interest rates. He also added that he is currently happy with his personal savings portfolio that he chose through a local bank as it does reflect today’s marketplace, an important note to keep in mind when working on your own savings efforts.

 

“The old adage, ‘save til it hurts’ holds true. Try to save as much as possible for the future is unknown.”

 

 

Saving Advice From Don White

Another thing to keep in mind is wise savings practices.

“Part of saving is to make sure you are not overburdened by high-interest debt,” he said.

He recommends “evaluating if it makes sense to use savings to pay the debt off depending on the interest rates.”

Another key piece of advice that Senator White offers?

“The old adage, ‘save til it hurts’ holds true. Try to save as much as possible for the future is unknown.”

Other than choosing the right savings platform for you and your goals, the state senator mentioned that the best financial advice he received is, “Diversify your savings, manage your debt. Debt is OK, but it has to be balanced, and it’s important to make sure the rates are reflective of the marketplace. Interest rates are an important part of investing, make sure you look into the best rates available.”

Takeaways from our sit down with Don White:

  • Take time to evaluate your expenses and budget.
  • Reconsider before using a bank account as an investment tool.
  • Save as much as possible.
  • Debt is OK as long as it’s balanced and maintained.

 

When Mr. White isn’t serving his community, he enjoys a new role of playing grandpa to his grandson Ben and fishing, although he mentioned public service does allow for little down time. You can learn more about Senator Don White and his work here.

Carly Fiorina Net Worth

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Carly Fiorina's Net Worth
Candidates’ policy positions are a very important part of deciding whether or not to vote for them. To some people the policy positions are the only important issue. On the other side some people take the view that the only thing that matters is a candidate’s background and qualifications. Sometimes looking at a candidate’s net worth can give some insight into both of these things. How did the candidates make their money? Is that relevant to the Presidency? How might the candidate’s self-interest impact policy positions? There’s always some distance between what candidates say they believe and how they actually govern. You can often judge their self-interest from their net worth and background. From there you might be able to gain some insight into what that distance will be.

Carly Fiorina has long been a businesswoman. In 1998 Fortune magazine named Carly Fiorina “The Most Powerful Woman in American Business.” At the time she chaired a joint venture called Phillips Consumer Communications. She’s most famous for becoming CEO of Hewlett-Packard in 1999. She was later forced to resign in 2005 after HP went through a difficult time.

Carly Fiorina’s Net Worth

Age: 61
Occupation: Former CEO of Hewlett-Packard
Most Money Made In: CEO of HP
Estimated Net Worth as of 2015: 59 Million

According to Forbes Carly Fiorina made over $100 Million working at HP. Her major in college? Philosophy and Medieval History. Philosophy and Medieval History! She later got her MBA in marketing but I wonder if her life turned out as she had planned it when she was going into college. There’s a lesson here, your major shouldn’t hold you back. Maybe she’s finding it useful in the grand melee called the Republican debates.

Carly Fiorina’s net worth is provided by the press release that she gave alongside her personal financial disclosure. Her personal financial disclosure was taken from the Center for Responsive politics webpage: opensecrets.org. The disclosure itself is quite interesting. Fiorina holds small amounts of hundreds of individual stocks, bonds, and partnerships. I don’t really know what to make of it. Someone is actively managing these positions. I don’t quite understand how it makes sense to have a $4,000 position in Monster Beverage, representing 6 ten thousandths of her portfolio. Moreover it doesn’t look like these positions were bought in order to simply have a low cost way of emulating the index. It appears to me that someone is trading them. So I’m left scratching my head. That’s like the average person spending time trying to decide whether to invest $40 of a half million dollar portfolio in a single stock. Carly Fiorina probably has more financial acumen than I will honestly believe myself to possess, but it’s a mystery.

Her incentives are mostly aligned with the very rich and the upper middle class. The very rich earn most of their money from capital gains and dividends. Here is an example of a way her wealth might incentivize her to vote. One proposal to increase government revenue is to increase taxes on capital gains and dividends to match earned income. This would cost Carly a great deal of money (as much as an additional 20% of her income) without benefitting her directly. That doesn’t necessarily mean she wouldn’t support such a proposal, or if she opposes it that she does so out of greed. It’s just that the negative effects are easier to envision and empathize with when you have to experience them yourself.

 

Bernie Sanders Net Worth

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Bernie Sanders' Net Worth
Candidates’ policy positions are a very important part of deciding whether or not to vote for them. To some people the policy positions are the only important issue. On the other side some people take the view that the only thing that matters is a candidate’s background and qualifications. Sometimes looking at a candidate’s net worth can give some insight into both of these things. How did the candidates make their money? Is that relevant to the Presidency? How might the candidate’s self-interest impact policy positions? There’s always some distance between what candidates say they believe and how they actually govern. You can often judge their self-interest from their net worth and background. From this information you might be able to gain some insight into what that distance will be.

Bernie Sanders is a self-described democratic socialist. He has been a US senator since 2006 and a congressman since 1988. He is well known for being the first independent member of the House of Representatives in 40 years. Bernie Sanders earned a degree in political science from the University of Chicago. Before becoming a member of the House, Bernie Sanders was mayor of Burlington for seven years.

Bernie Sanders’s Net Worth

Age: 74
Occupation: Politician
Most Money Made In: US Senate
Estimated Net Worth as of 2015: $420,000

Over the last 9 years Bernie Sanders made 1.5 million dollars in the senate. The important lesson here is that even if you have a high income, it is still important to spend less than you make. If you spend all of the money you make, you make no progress. Of course, maximizing net worth isn’t necessarily his goal, nor does it need to be.

Bernie Sanders’s net worth is provided by his personal financial disclosure. His personal financial disclosure was taken from the Center for Responsive politics webpage: opensecrets.org. The disclosure itself is quite interesting. It isn’t at all clear to me what Sanders is doing with the rest of his income. According to his tax returns he donated about $10,000 to charity last year. His entire net worth appears to be attributable to his spouse, so all of his money seems to be getting spent one way or another.

It seems to me that this probably indicates that for his retirement he is relying on his wife’s money, his congressional pension, and social security. His interests are therefore relatively more aligned with folks that are part of a similar pension scheme and social security. This may predict his behavior. For example, one proposal is that senators should have to depend on social security rather than their congressional pension. Sanders would likely be grandfathered, but if not, this would represent a huge drop in his retirement income. That doesn’t necessarily mean he wouldn’t support such a thing, or if he opposes it that he does so out of greed. It’s just that the negative effects of policy are easier to envision and empathize with when you have to experience them yourself.

 

Rand Paul Net Worth

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Rand Paul's Net Worth
Candidates’ policy positions are a very important part of deciding whether or not to vote for them. To some people the policy positions are the only important issue. On the other side some people take the view that the only thing that matters is a candidate’s background and qualifications. Sometimes looking at a candidate’s net worth can give some insight into both of these things. How did the candidates make their money? Is that relevant to the Presidency? How might the candidate’s self-interest impact policy positions? There’s always some distance between what candidates say they believe and how they actually govern. You can often judge their self-interest from their net worth and background. From there you might be able to gain some insight into what that distance will be.

Rand Paul is the son of the longtime libertarian Ron Paul. He went into Opthalmology after college and remained a doctor for quite some time, until he was elected to the US Senate in 2010. He sold his ophthalmology practice in 2012 for $55,000. Paul describes himself as a constitutional conservative. He supports a balanced budget amendment. In the Republican presidential election he represents a libertarian leaning-candidate. He occasionally gets press for returning part of his office operating budget to the US Treasury. He says that his savings are due to frugality in managing the office.

Rand Paul’s Net Worth

Age: 52
Occupation: Opthamologist
Most Money Made In: Ophthalmology
Estimated Net Worth as of 2015: 1.1 Million

The lesson here is that doctors make a substantial amount of money. Occasionally due to high debt and expectations, doctors have issues saving money. This doesn’t seem to be the case for Rand Paul. Though it is valuable to recognize that even if you have a large income, you still are required to spend less than you earn.

Rand Paul’s net worth is provided by his financial disclosure. His personal financial disclosure was taken from the Center for Responsive politics webpage: opensecrets.org. The disclosure itself is quite interesting. Rand Paul owns a few index funds and rental properties. He also receives substantial royalties from books he has written.

His incentives are mostly aligned with the rich. He earned most of his money in a high earning profession, medicine. Here is an example of a way his income might incentivize him to vote. He depends on a large income in order to support a great deal of spending. It seems as though the salary of the president would probably be sufficient. It is important to note that because of his high income he is pretty exposed to changes in tax rates on high earners. Some have suggested that income taxes on the upper income brackets be increased. Paul is dependent largely on earned income, like book royalties. Increases in upper income tax brackets hit him hard, compared to other millionaires who might be earning most of their money from capital gains and dividends. That doesn’t necessarily mean he wouldn’t support such a proposal, or if he opposes it that he does so out of greed. It’s just that the negative effects are easier to envision and empathize with when you have to experience them yourself.

For more on our series of politicians and their net worth check out:

Donald Trump’s Net Worth

Hillary Clinton’s Net Worth

Bernie Sander’s Net Worth

Jeb Bush’s Net Worth

Carly Fiorina’s Net Worth

Marco Rubio’s Net Worth

Five Topics You Should Never Discuss With Clients

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I am tired. I have been up for the past two nights until about 1 am trying to finish projects for clients and writing content for my website. I am also a bit under the weather, as I seem to have a sore throat and headache that just won’t go away. I can tell you such things. I can also tell my family when I am sick or tired, or even when I am just down in the dumps. I can tell my friends when things are not going right. There are a lot of people I can tell, but there is one very important group of people who never need to know, or even should know, when I am sick, tired, down or frazzled – my clients.

It is always important to remember that even when your clients are your friends, they are not your friends when they are your clients. Clients are a special class of people. They are people who want to give you money for your time, talent and energy. They do not want to know when you are tired because, by implication, they are contributing to your fatigue. They do not want to know when you are not feeling well or you down in the dumps because that means that they are not necessarily getting your best work. They do not want to know when anything bad is happening in your universe.

Your clients are special. You need to insulate your clients from every negative aspect of your life just as if you were always on a first date and doing your best to ensure a second date. If you are going to have a successful experience with your clients, there are a lot of subjects you need to avoid and they include:

Politics: Your clients do not need to know whether you are a Democrat, Republican or anything else. Do not offer that information. If your client asks you your political leanings, answer truthfully but briefly. If you can describe yourself as a moderate, do so. Of course, if you find out that your client supports a particular candidate or issue, and you actually support the candidate or your client’s position as well, you can talk about that candidate or issue. Just do not get too zealous.

Religion: As with politics, it is generally not a good idea to talk about religion outside of your church. If your client asks you to which house of worship you belong, you can answer truthfully but never get into a debate over the merits of one faith over another, even if your client tries to do so.

Gossip: Whether you live in a small town or a large city, it is never professional to gossip. If your client knows that you will gossip about other people, your client also knows that you will gossip about him or her.

Regrets: Whether you love your job or hate your job, your client needs to believe that you love it. Talking about career decisions that you regret or unpleasant things that you have to do for your job will not instill in your client any sense of confidence in you. Whatever you may have to do, do it with a smile.

Sex: In the work place, we are all gender neutral, sexless beings. At least that is how it should be. Keep it that way and you cannot run into problems.

What other subjects do you feel should be taboo when speaking with clients or customers? Have you ever had a conversation with a client that you regret? Have any people you have hired ever brought up subjects that you feel were inappropriate.