(Bloomberg) -- Atlanta restaurateur Deborah VanTrece quietly put a notice on Facebook (NASDAQ:FB) Monday night inviting furloughed federal workers to her Southern (NYSE:SO) eatery for a free meal on Martin Luther King Jr. Day. She wasn’t prepared for what came next.
“By Tuesday it had exploded,” said VanTrece of Twisted Soul Cookhouse and Pours. Some 500 people have called in about it, and she’s had to extend the luncheon by two hours to accommodate the demand. So many people have called from all federal agencies “to the point that it’s started to scare me about the trickle-down effect of the shutdown.”
She’s not the only one nervous. U.S. consumer sentiment tumbled to the lowest level since October 2016 and future expectations dimmed, according to figures released Friday, giving fresh evidence that concerns about the government shutdown are creeping into the American psyche.
Lowest Level
The University of Michigan’s preliminary January sentiment index fell to 90.7 from the prior month, missing all estimates in a Bloomberg survey of economists, according to a report Friday. The measures of current conditions and expectations both declined to the lowest since President Donald Trump’s election in 2016.
Richard Curtin, director of the University of Michigan consumer survey, attributed the drop to “a host of issues including the partial government shutdown, the impact of tariffs, instabilities in financial markets, the global slowdown, and the lack of clarity about monetary policies.”
For all the hand-wringing over furloughed public employees, most economic forecasters still don’t expect it to cause too much pain to growth so long as it doesn’t drag on for months. For starters, an event affecting about 800,000 workers is a relatively small portion of a U.S. labor force totaling 163 million people. And there’s a snapback effect: The drag to gross domestic product that the shutdown is causing now will turn into a propellant when the stalemate ends and people get paid again.
According to the median forecast in a Jan. 15-17 Bloomberg survey, analysts project the federal government will reopen by mid-February, though if the closure lasts through March, the disruption will cause economic growth to dip below 2 percent this quarter. At the same time, just under half say the government impasse increases the probability of a recession this year.
More Dire Predictions
The relatively sanguine assessment is at odds with some more dire recent predictions, including by Deutsche Bank AG (DE:DBKGn). The White House itself doubled the estimated negative fallout.
Federal workers deemed non-essential are eligible to apply for unemployment benefits but they have to repay the assistance when their checks with back pay eventually arrive. About 15,000 applied for weekly jobless benefits during the first two weeks of the shutdown, according to Labor Department figures released Thursday.
Still, some small businesses with federal contracts or waiting on government actions are sweating the delays. In the Atlanta suburb of Marietta, former schoolteacher Thomas Monti and his business partner are building out a new craft brewery, Schoolhouse Brewing, and waiting on a license from the U.S. Alcohol and Tobacco Tax and Trade Bureau. It normally takes 45 to 60 days to get such a license - unless the government shuts down, Monti said.
“Being former teachers, we are used to bureaucracy,” he said. “We are staying optimistic that the shutdown is going to end sooner rather than later. But is it a concern? Yes, we can’t open our business without doing this."
For others who are affected, an extended period without income may leave lasting damage to their personal finances as they dip into savings to make ends meet or run up expensive credit-card debt.
Brandon Long, 33, an investigative specialist at the Department of Justice, was declared an essential employee, meaning he has to report to work even though staff has been furloughed.
Falling Behind
His schedule is erratic, so he can’t arrange for another job to help pay the bills. Even if he could, the father of five with a stay-at-home spouse said the government sets strict rules on doing part-time work. Long, who was last paid on Dec. 29, is supposed to get another check on Friday Jan. 25.
After falling behind on his car payment, car insurance, his student loan and other bills, he launched a GoFundMe campaign to raise $500 for groceries, rent (due in a couple of weeks), baby formula, diapers, wipes. As of Friday afternoon, he’d raised $650. They’ve nearly depleted their savings.
“Me and my wife sacrificed a lot to get our credit in a good place, and we were hoping to get a house next year,” said Long, who’s worried the late payments will damage their credit rating.
“You gotta live this squeaky-clean lifestyle to get a job in government,” he said. “You do all this stuff, and now I’m getting punished for something I have nothing to do with.”