"How a Government Shutdown Would (and Wouldn't) Impact Consumers Just Before Christmas"

 

Dec. 20, 2024, 7:59 PM GMT+6 / Updated Dec. 20, 2024, 9:37 PM GMT+6

Travelers may experience delays at airports during the busy holiday season, but mail will continue to flow without disruption. 

If the government shuts down just before Christmas, holiday travel may be disrupted, though holiday shipping is expected to continue unaffected.

As of Friday morning, lawmakers were still working to reach an agreement to prevent a U.S. government shutdown set to begin at 12:01 a.m. Saturday, after President-elect Donald Trump blocked a bipartisan funding bill on Wednesday.

The last government shutdown occurred in 2019 during the Trump administration and lasted 35 days, costing the U.S. economy an estimated $3 billion, according to the Congressional Budget Office.

Follow live updates on the government shutdown.

The length of any potential shutdown remains uncertain, but here are some ways consumers could be affected and where services would continue as usual.

Air Travel Delays Likely
During the 2019 shutdown, travelers experienced longer lines at airports as some TSA staff and air traffic controllers chose not to report to work. While Transportation Security Administration (TSA) workers are considered essential and required to stay on duty during a shutdown, without funding, their paychecks would be halted. This could lead many workers to stay home, resulting in bottlenecks at airport checkpoints, especially during the busy holiday season when TSA expects a 6.2% increase in screenings.

"While our personnel are prepared to handle high volumes of travelers and ensure safe travel, please be aware that an extended shutdown could result in longer wait times at airports," TSA Administrator David Pekoske warned Thursday.

During the last shutdown, the national absence rate among TSA officers spiked from 3% to 10%, with Dallas-Fort Worth International Airport seeing call-outs increase by up to 300%, according to research firm Tourism Economics.

Mail and Social Security Payments Unaffected
While travelers may face disruptions, holiday mail deliveries are unlikely to be impacted. The U.S. Postal Service operates independently and is generally funded by its own sales and services, not tax dollars. During a near-shutdown in September 2023, the Postal Service confirmed that it would continue delivering packages without interruption.

However, the cutoff for deliveries to arrive by Christmas Day has already passed for ground advantage and first-class mail. The deadline for priority mail express is December 21. Meanwhile, the 73 million people receiving Social Security benefits will still receive their payments since Social Security is a mandatory program that doesn’t rely on short-term funding.

That said, those seeking assistance from the Social Security Administration may experience longer wait times as some staff may be furloughed. The agency is already operating with a 50-year low in staffing, as House Republicans rejected additional funding in the September bill.

Stock Market's Reaction to Shutdown
A government shutdown could add to the turmoil in the stock market, which has already seen volatility in recent weeks. Investors are particularly concerned about the impact on their retirement and stock portfolios heading into the new year.

Stocks saw a modest rise Friday morning, despite ongoing concerns about Washington's gridlock, following a string of declines in the Dow Jones Industrial Average, which posted its longest losing streak since 1974. The Dow was up nearly 1% in mid-morning trading, buoyed by positive inflation data.

"Historically, government shutdowns have had little lasting impact on equity performance," said Edward Jones in a recent note. "Stocks were positive half the time during shutdowns and generally higher three and six months later."

However, the shutdown threat coincides with signals from the Federal Reserve indicating it will slow down interest rate cuts. This news caused a significant drop in the Dow earlier in the week, marking its worst trading day since August.

Mark Hackett, Chief of Investment Research at Nationwide, noted that markets were already in decline after repeatedly hitting new highs in 2024. He called the recent downturn a "due" pullback. While shutdowns tend to provoke a brief emotional response on Wall Street, Hackett warned that the combined impact of a shutdown and the Fed's decision has intensified market concerns, likening it to "two cans of gasoline being thrown on a fire."