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After 43 days, the U.S. government shutdown finally came to an end late on November 12, when Congress voted through a long-overdue funding bill, which President Donald Trump promptly signed. But the prolonged gap in government-as-usual has come at a cost to the economy. The Conversation spoke with RIT economist Amitrajeet A. Batabyal on the short- and long-term impact that the shutdown may have had on consumers, on the gross domestic product, and on international trust in U.S. stewardship of the global economy. What is the short-term economic impact of the shutdown? Having some 700,000 government workers furloughed has hit consumer spending. And a subset of those workers believed they may not have a job to come back to amid efforts by the Trump administration to lay them off permanently. In fact, the University of Michigans monthly index on consumer sentiment tumbled to a near record low in Novembera level not seen since the depth of the pandemic. Because lower consumer sentiment is related to reduced spending, that has a short-term impact on retailers, too. And because parks and monuments have been closed throughout the shutdown, tourism activity has been downa decline no doubt worsened by the reduction in flights enforced due to shortages in air traffic controllers. The effect was particularly pronounced in places like Washington, D.C.one of the most popular destination for touristsand Hawaii. This short-term effect will likely extend to secondary businesses, such as hotels. Indeed, prior to the shutdown, the U.S. Travel Association warned that such an event would cost the total travel industry around $1 billion a week. And the longer-term impact? Estimates range, but the nonpartisan Congressional Budget Office has said that the cost to Americas gross domestic product in lost productivity is in the range of $7 billion to $14 billionand that is a cost from a self-imposed wound that will never be recovered. And from an international macroeconomic point of view, trust in the U.S. has been hit. Even before the shutdown, political dysfunction in Washington contributed to a downgrade in the U.S. credit ratingsomething that could result in higher borrowing costs. The shutdown further erodes the U.S.s standing as the global leader of the free market and rules-based international order. Accompanied by the economic rise of China, this shutdown further erodes international investors impression of the U.S. as an arbiter and purveyor of the established trade and finance systemand that can only hurt Washingtons global economic standing. Has the economic pain been felt evenly? Certainly not. Large numbers of Americans have been hit, but the shutdown affected regions and demographics differently. Those on the lower end of the income distribution have been hit harder. This is in large part due to the impact the shutdown has had on the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. Some 92% of SNAP benefits go to American households below the federal poverty line. More than 42 million Americans rely on SNAP payments. And they were caught up in the political maelstrom, left not knowing if their SNAP payments will come, if they will be fully funded, and when they will appear. There is also research that shows Black Americans are affected more by shutdowns than other racial groups. This is because traditionally, Black workers have made up a higher percentage of the federal workforce than they do the private sector workforce. Geographically, too, the impact of this shutdown has been patchy. California; Washington, D.C.; and Virginia have the highest proportion of federal employees, so that means a larger chunk of the workers in those regions were furloughed. Hawaii has also ben disproportionately hit due to the large number of military there. One analysis found that with 5.6% of people in the state federally employed, and a further 12% in nonprofit jobs supported by federal funding, Hawaii was the second-hardest-hit state during the shutdown. How easy is it for the U.S. to recover from a shutdown? Because shutdowns are always temporary, recovery depends on how long it has gone on. Traditionally, the long-term economic trend is not badly affected by the short-term pain of shutdowns. But it may be slightly different this time around. This shutdown went on longer than any other shutdown in U.S. history. Also, the nature of this shutdown raises some concerns. This was the first shutdown in which a president said that back pay was not a sure thing for all furloughed federal employees. And the uncertainty over those threatened with layoffs again broke from past precedent. Both matters seemed to have been settled with the deal ending the shutdown, but even so, the ongoing uncertainty may have affected the spending patterns of many. And we also do not know what the economic impact of the reduction of domestic flights will be. Have other economic factors exacerbated the shutdown effect? While the shutdowns in Trumps first administration did take place while tariffs were being used as a foreign policy and economic tool, this year is different. Trumps tariff war this time around is across the board, hitting both adversaries and allies. As a result, the U.S. economy has been more tentative, resulting in greater uncertainty on inflation. Related to that are the rising grocery prices that have contributed to an upward tick in inflation. This all makes the job of the Federal Reserve harder when it is trying to fine-tune monetary policy to meet its dual mandates of full employment and price stability. Add to that the lack of government data for more than a month, and it means the Fed is grasping in the dark a little when it comes to charting the U.S. economy. Amitrajeet A. Batabyal is a distinguished professor, Arthur J. Gosnell Professor of economics, and head of the Department of Sustainability at the Rochester Institute of Technology. This article is republished from The Conversation under a Creative Commons license. Read the original article.
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E-Commerce
Its open enrollment season againthat period between October and November when workers must reacquaint themselves with deductibles, copays, and premiums. Many would rather wait at the DMV, sit through a three-hour work meeting, or attempt to explain social media to tech-challeged loved ones than spend their afternoon selecting an insurance plan. Thats why some workers are farming out everything on their health insurance to-do list to AI and social media. New research from HR tech company Justworks and The Harris Poll shows were entering the era of benefit burnout: Many people are not doing their own research on what plans are best for them, and instead of consulting HR, they’re outsourcing their decisions to artificial intelligence or crowdsourcing on TikTok. Some are simply hitting renew to avoid the stress altogether, potentially costing themselves and their employers in the long run. Its a precarious time to be doing that, and with rising premiums, open enrollment is set to be more stressful than ever. According to a study by health policy research and polling firm KFF, the amount health insurers charge for coverage on the ACA marketplaces is rising by an average of 26% in 2026. Justworks Benefit Blindspots Report, released earlier this month, found that 62% of zillennials (Gen Z and millennials) would entrust AI to help them decode benefits or compare plan options rather than try to figure it out themselves. Thats compared with just 29% of Gen Xers and boomers. Its not just AI. Gen Zers are also more likely to use TikTok, Instagram, or Reddit for research than to ask their employer or HR department for help. It doesnt always pay off: Nearly half forget or regret what plan they picked, according to the Justworks data, and 22% simply reenroll in last years plan rather than shop around. Healthcare is one of your biggest annual expenses, right after rent, yet 22% of people simply reenroll in last years plan without looking at the details, David Feinberg, SVP of risk and insurance at Justworks, told Fast Company. Take the time to review how your needs have changedsuch as new prescriptions, dependents, or health goalsbefore you simply reenroll in last years plan. The more expensive the plan is doesnt always mean it’s better, either. I see so many people default to the most expensive plan they can afford, assuming its the safest bet. In reality, the right choice depends on your actual health needs and risk tolerance, Feinberg said. A high-deductible plan paired with an HSA can provide you with savings for healthcare needs in the long term. Gen Zers and millennials are also leaving money on the table when it comes to flexible spending accounts (FSAs) and health savings accounts (HSAs). While 30% of zillennials have an FSA or HSA, only about 1 in 5 (19%) use one and understand the benefits of it, according to the Justworks data. Tax-advantaged accounts are one of the most underused benefits out there. You can use them for everyday needs like contact lenses or therapy apps, and if you invest your HSA early, it can grow tax-free for decades, Feinberg said. Its one of the easiest ways to build long-term financial wellness through your benefits. Thats where employers can step in, rather than leaving AI to fill the knowledge gap. Employers who meet Gen Z where they arewith digital tools, plain language, and proactive supportwill help close the confidence gap driving so much planxiety, he added. Luckily, some firms are already rolling out AI chatbots to answer staffs HR questionsa more solid alternative, perhaps, for workers whod boot up ChatGPT for tips instead.
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E-Commerce
From fake apologies that spread like wildfire on social media (as was the case during the Astronomer CEO scandal) to companies facing backlash for using generative AI without safeguards, recent crises have shown how quickly brand reputations can unravel in the digital age. The rapid spread of misinformation online, combined with new risks tied to emerging technologies, has left organizations more vulnerable than ever. Companies that are not ready to deal with a crisis are putting their brands, reputations, and future at risk. There are three warning signs that your workplace is unprepared for the next disaster, scandal, or other corporate emergency. 1. Theres No Crisis Management Plan Unless a crisis management plan is in place, organizations will not know what to do when a crisis strikes, who will do it, how to do it, or why it should be done. For every minute a business delays in responding to a crisis, it will find itself in a defensive position and at a loss on the steps it should take to address the unfolding situation. Just as bad as having no plan is having one that has not been updated to account for the latest risks that can threaten the organization. Take AI, for example. According to research conducted by Riskonnect, 65% of surveyed companies do not have a policy in place to govern the use of generative AI by partners and suppliers. The reckless use of AI can result in fraud, plagiarism, and violations of intellectual property laws, all of which can create the risk of litigation and a crisis for businesses. The best and most effective plans should include these major categories: When and how the plan was prepared, updated, and tested The event or development that will trigger a crisis for the company Who has the authority to activate the plan What should be done and in what order to address the crisis What needs to be said about the situation, and who will say it Who should be told about the crisis, and how they should be notified Depending on the nature of the risks that companies can face, it is prudent to create separate crisis management plans for each of the risks. That is because responding to the threat of a lawsuit will be vastly different than responding to the death of the CEO, for example. The plans should be tested regularly to ensure they will work when needed. The plans can be evaluated through tabletop, field exercises, and computer simulations. Based on the results of the exercises, the plans should be updated and strengthened. Information about the plans should be shared with corporate officials and employees so they know there are protocols and policies in place that should govern how the company will respond in case of a crisis. 2. A Crisis Management Team Has Not Been Appointed Without a team in place to implement a crisis management plan, organizations will find themselves scrambling to figure out what to do and who will do it when a crisis strikes. The composition of teams will depend on the nature and size of organizations. For large companies, a team of five to seven people will usually suffice, and could include representatives from HR, IT, legal, marketing, public relations, and the board of directors. The team should meet regularly to practice working together under deadlines and pressure, test the crisis management plan, and make necessary adjustments to the team and plan. 3. You Dont Know What To Say When Theres A Crisis Silence is not golden when a crisis strikes an organization. The longer that you remain quiet about a crisis, the more likely it is that others will fill the vacuum and take control of the narrative. At the very least, businesses should prepare appropriate generic statements that can be issued immediately and then customized and updated as necessary. For example, if a lawsuit is filed alleging sexual abuse by a top corporate executive, one example of an initial statement is that We are aware that a lawsuit has been filed and will have more to say about it at a later date. But be careful about saying anything that could create a risk for litigation or liability in connection with the crisis. Consult with legal counsel to help minimize those risks. A qualified individual should be appointed ahead of time who will serve as the public face of the company when a crisis strikes. The best spokesperson will have a background in public relations or journalism and will have gone through media training. If you dont have anyone on staff to fill this important role, then consider retaining the services of a public relations firm or consultant who could serve as the public face of your company during this critical time. When the plans and teams are activated, corporate officials should resist any temptation to micromanage or second-guess them. Team members will have their hands full dealing with the matters at hand, and any efforts to interfere with their responsibilities will make their work that much harderand could extend or worsen the crisis. After the crisis has passed, a report should be prepared on how well the plans were followed, how well the teams worked to manage the crisis, and any lessons learned that can be applied to improve the organizations response to its next crisis.
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E-Commerce
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