What does the shutdown mean for your wallet?Posted: Updated:
PHOENIX -- What does the government shutdown mean for your wallet? Congress is still getting paid and thousands of federal workers aren't.
Ultimately, the shutdown could slow down the economy and cost the entire country billions of dollars, but that all depends on how long it lasts.
“I think Wall Street can take care of itself,” said Phoenix resident Joe Esposito. But he worries about the ripple effect of those federal employees who are furloughed. “Well, if you don't have money, you don't spend money. If you don't spend money you don't support the economy," he says.
The American economy is in a state of recovery, but this shutdown could cause a slowdown.
“That's what recoveries are about is spending, but why spend more if you’re not sure you’re going to have a job?" said Brian Robinson, financial adviser with The BDA Wealth Group. And despite the current situation, he's optimistic the shutdown won't last. “History has told us this is going to be fixed," he says.
Of course, time is of the essence. “You need visibility and clarity, and with this shutdown you miss a lot of that,” said Robinson.
For example, the Labor Department is set to release its job report on Friday, but a shutdown would prevent that, and could cause some volatility in the markets and indecisiveness in business.
“Before we hire, before we make the inspection, before we get a loan or issue bonds to expand our corporation, we need to figure out where is our economy,” said Robinson.
Despite the unrest in Congress, investors didn't push the panic button. That suggests that, at least for now, they aren't anticipating the stalemate to last or to threaten the economic recovery.
The last government shutdown, from December 1995 to January 1996, lasted 21 days and while stocks lost about 4 percent of their value, once a deal was reached, those stock values shot up 10 percent.
So, Robinson says, right now, the best advice is to stick with your current investment strategy and maybe even take advantage of any dip in the market.