U.S. travel industry fears damage from a long government shutdown

[SBUS-CXK]

ATLANTA — America’s busiest airport, Atlanta’s Hartsfield-Jackson International, is a blur of activity on the best of days. But an extra layer of anxiety gripped the airport Friday, the eve of a three-day holiday weekend. The partial government shutdown – the longest ever – has thinned the ranks of federal workers who staff airport security lines. And some travellers had braced for the worst.

“I have a 3 o’clock flight, and I arrived at 10:15 a.m.,” Beth Lambert said while waiting to check in at a Delta Air Lines counter as her 5-year-old, Michael, rode around on his wheeled bag like a scooter. “We’re going to be hanging out for a while.”

The scene at most of the nation’s airports has so far been marked more by concerned passengers showing up early than by missed flights. Longer lines are evident at some airports. But delays resulting from a rise in federal security screeners calling in sick have been slight.

Yet concern is quickly growing. President Donald Trump and Democrats in Congress remain far apart over Trump’s insistence on funding for a wall along the Mexican border as the price of reopening the government. With the two sides trading taunts and avoiding talks, travel industry analysts and economists have been calculating the potential damage should the shutdown drag into February or beyond.

Airlines and hotels would suffer. So would parks and restaurants that cater to travellers. And, eventually, the broader U.S. economy, already absorbing a trade war with China and a global economic slowdown, would endure another blow.

The travel and tourism industries generate about $1.6 trillion in U.S. economic activity – one-twelfth of the economy – and one in 20 jobs, according to the Commerce Department. Macroeconomic Advisers says it now expects the economy to expand at just a 1.4 per cent annual rate in the first three months of this year, down from its previous forecast of 1.6 per cent, because of reduced government spending during the shutdown.

America’s air-travel system will face its sternest this weekend, which coincides with Martin Luther King Jr. Day on Monday, a federal holiday. The Transportation Security Administration predicts it will screen over 8 million passengers between Friday and Monday, up 10.8 per cent from last year’s MLK weekend. And it will do so with fewer screeners. On Thursday, the TSA said 6.4 per cent of screeners missed work – nearly double the 3.8 per cent rate on the same day in 2018.

A TSA spokesman said the agency was offering overtime to screeners for this weekend, though those workers wouldn’t be paid – for their regular pay or for overtime – until the shutdown eventually ends.

More news: TSA absentee rate still high, but down from Sunday's peak
On top of potentially longer airport security lines this weekend, a blast of winter weather could snarl travel this weekend in the Midwest and Northeast.

Hartsfield-Jackson Atlanta International, home to Delta Air Lines, has likely been the hardest hit airport. Delta said this week that the shutdown will cost it $25 million in January because fewer federal employees and contractors will be flying. By contrast, United Airlines, which has a substantial presence around Washington, D.C., said it hasn’t felt much impact yet.

But the airlines fear that if the shutdown doesn’t end soon, more TSA agents will call in sick or quit. A shortage of screeners would cause security lines to swell. Air traffic controllers, who are also working without pay, say they, too, are short-staffed. If the controller shortage became severe enough, the government could restrict the number of flights, though some analysts think that’s unlikely.

“Luckily this is the low season – January is one of the weakest months of the year,” said Savanthi Syth, an airline analyst for Raymond James. “This spilling into February is a real concern. The risk is that the longer this drags out, it might cause some passengers to say, ‘I don’t want to deal with all the hassle, maybe I won’t take that trip.'”

Consumers are, in fact, taking a dimmer view of the economy, in part because of the shutdown. A measure of consumer confidence fell this month by the most in more than six years, according to the University of Michigan, which conducts the survey. If Americans were to cut back on travel and other discretionary spending, it would weaken consumer spending, the U.S. company’s primary fuel.

Laura Mandala, who runs a travel and tourism research firm, said the shutdown might discourage international travellers, too.

“These uncertainties will result in fewer conferences being booked,” Mandala said, leading to “convention and hotel staff layoffs, reduced schedules, resulting in less income for workers to spend in the local economy.”

Hotels are starting to feel the impact, particularly in the Washington, D.C., region but also in other cities with substantial federal workforces, such as San Diego, which has a large naval base.

In the Washington area, including its nearby suburbs in Maryland and Virginia, hotel revenue plunged 26 per cent in the second week of January compared with the same period last year, according to STR, a travel research firm. That’s much steeper than the 8 per cent decline that occurred nationwide.

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Michael Bellisario, an analyst for investment bank R.W. Baird, suggested that other factors accounted for the most of the nationwide drop but said the shutdown almost certainly played a role.

“In no way is the government shutdown a positive for hotel demand and travel,” Bellisario said.

If the shutdown lingers and people see more reports of long TSA lines on television news, “they will say, ‘Oh wow, travelling is hard,’ and that impacts the hotel industry,” said Jan Freitag, a senior vice-president at STR.

For now, though, the most visible impact has been at airports. One of the seven checkpoints at Houston’s main airport has been closed all week and will remain so indefinitely, a spokesman said. Miami closed one concourse during the afternoons and evenings last weekend. On the other hand, officials at airports in New York, Los Angeles, Chicago and Miami said they weren’t experiencing any problems.

The problems would emerge if the shutdown persists, and the damage would extend to the private companies that operate airport shops and restaurants.

Mike Boyd, an airport consultant in Colorado, noted that a pullback in travel would be felt most in airports that are heavily dependent on government employees such as Reagan National Airport outside Washington, Manhattan Regional Airport in Kansas, near the Army’s Fort Riley, and Watertown International Airport in upstate New York, near Fort Drum.

Federal employees going without pay – there are about 800,000 of them, including 420,000 who are still working – are already suffering, of course.

“We still have to make sure our kids eat, make sure to have a roof over their head,” said Shalique Caraballo, whose wife is a TSA worker in Atlanta. “We sweat in private and don’t let the kids see the struggle.”

Some in the airline industry and even in Congress have suggested that longer TSA security lines could exert enough pressure on politicians to break the stalemate that is keeping the government shuttered.

Others have all but lost hope.

“I would love to think that politicians understand that travel and tourism is an incredibly important gear in the economy,” said Ninan Chacko, CEO of Travel Leaders Group, which owns and manages travel agencies, “but I don’t think that is really the rational discussion that is taking place in Washington.”

http://www.travelweek.ca/news/travel-industry-fears-damage-from-a-long-government-shutdown/

 

[Three_Kingdoms]

Government Shutdown Cost U.S. Economy $11 Billion, C.B.O. Says

Federal employees lined up in Washington for free meals during the shutdown.CreditTom Brenner for The New York Times

Federal employees lined up in Washington for free meals during the shutdown.CreditCreditTom Brenner for The New York Times
By Alan Rappeport and Binyamin Appelbaum

• Jan. 28, 2019

WASHINGTON — The five-week federal government shutdown took a significant economic toll, costing the United States economy $11 billion, with nearly a quarter of that total permanently lost, the Congressional Budget Office said on Monday.

The figures are the first official projection of the economic effects of the longest federal shutdown in history, and they show that its cost was nearly double the $5.7 billion request by President Trump for a border wall that fueled the impasse. That is enough to reduce first-quarter growth by about 0.4 percentage points.

Much of that spending was simply delayed, and will flow back into the economy as workers get back pay. But the report makes clear that not all the economic damage will be undone and that the effects of the shutdown will linger. With the federal government funded for just three weeks and Mr. Trump threatening to shutter the government again if his demands for a wall are not met, many workers say they are planning to spend less of their income and increase rainy-day savings.

Kelly Spencer, a federal contractor at the Justice Department, was planning to buy her first home this spring, but as she returned to work on Monday, she said she was shelving those plans.

Ms. Spencer was not paid during the five-week shutdown of the federal government, and as a contractor, she is among the thousands of workers who will not receive back pay. But she said the problem is not just the lost money. She is no longer confident she could make a mortgage payment every month.

“This job was supposed to be stable and secure,” she said. While she had worked hard to pay off her debt and clean up her credit to qualify for a mortgage, she was forced to run up credit card debt again during the shutdown.

Buying a home, she said, “is no longer in the foreseeable future.”

Even those who are getting back pay say they will not return to their previous spending habits, given that another shutdown could happen in a few weeks.

“I don’t feel comfortable going back to the spending levels I had before,” said Tamara Brown, a State Department employee. She received half of her missing pay on Monday, and said she expected the rest later this week. Still, she said, “I’m going to be very conservative until I’m sure this is all over.”

On the chopping block: restaurant lunches and trips to Target.

The report by the nonpartisan budget office said the shutdown, which started in late December and ended Friday, reduced gross domestic product by $3 billion in the fourth quarter of 2018, and by $8 billion in the first quarter of 2019.

The damage caused by the shutdown comes against a gloomy fiscal backdrop. Economic growth already was expected to slow this year. The budget office projected on Monday that real gross domestic product would slow to 2.3 percent in 2019, down from 3.1 percent last year, and that the federal budget deficit would hit $900 billion.

Over the next decade, federal debt held by the public is expected to climb from $16.6 trillion to $28.7 trillion. By 2029 it is expected to reach its highest level as a percentage of gross domestic product since the end of World War II.

The Federal Reserve, which meets this week, has indicated that it plans to pause and take the measure of the economy before considering any additional increases in its benchmark interest rate.

The budget office said growth in subsequent quarters would increase as delayed spending filtered through the economy. However, it estimates that $3 billion will never be recovered. The figure is basically an estimate of the value of the government work that was not performed during the shutdown.

The budget office also said the economy suffered “more indirect negative effects,” which are harder to quantify but stemmed from businesses being unable to obtain permits and certifications and reduced access to federal-backed loans. “Such factors were probably beginning to lead firms to postpone investment and hiring decisions,” the office said.

Morgan Stanley estimated Friday that the shutdown would reduce first-quarter output by 0.5 percentage points, a slightly larger reduction than the budget office projection, although it also predicted most of the loss would be recouped.

Larry Kudlow, the director of Mr. Trump’s National Economic Council, dismissed the C.B.O. report, noting that the budget office regularly has a more pessimistic view of the economy than the White House.

“I won’t acknowledge any of that right now,” Mr. Kudlow said on Monday. “Let’s see how it rolls out.”

Mr. Kudlow argued that it was difficult to make precise projections when analyzing a $20 trillion economy. He said that the stories of individual hardship were problematic, but that the macroeconomic effects of the shutdown would be minimal.

Democrats seized on the report, saying the economic damage should persuade Mr. Trump not to shut down the government again.

“As the dust settles from the Trump shutdown, it is clear as day that the president’s temper tantrum caused serious and lasting damage to our nation’s economy,” said Senator Chuck Schumer of New York, the minority leader.

Senator Mitch McConnell of Kentucky, the majority leader, said on Monday that he did not want to go through another shutdown.

“I think a shutdown is a bad idea, remains a bad idea, and I’m optimistic we will not be in that position yet again,” Mr. McConnell said.

Laura Dodson, an agricultural economist at the Agriculture Department, said the shutdown was particularly stressful because she had just $1,000 in her bank accounts when her paychecks stopped coming. Her rent was coming due, and she needed money to pay for her ovarian cancer treatments.

“The big concern I have is speaking from the standpoint of a millennial, someone in their 20s, is the fear and insecurity,” said Ms. Dodson, 26. “I thought I had a good job with good health insurance and was in a stable spot, but I guess not.”

Ms. Dodson said she planned to more aggressively pay off her credit card debt and loans and make sure that she had a larger cash reserve in case another shutdown came.

“I am pretty worried that if it goes to a second shutdown, it could go on for months,” Ms. Dodson said.

Even with the government open for business on Monday, federal workers who had yet to be paid lined up patiently along Pennsylvania Avenue for free lunches at World Central Kitchen, a nonprofit run by the restaurateur José Andrés that usually serves free meals in communities struck by natural disasters.

Mark Stevens, 37, works at the Superior Court of the District of Columbia, which is funded by the federal government. He said he was furloughed and then called back to work, but he hasn’t been paid in more than a month.

He said he was grateful for the free meal “because I still don’t have any money.”

Mr. Stevens said he had about two months of salary in savings when the government shut down, and his landlord helped out by postponing a rent payment. Even so, he said he had a pile of bills to tackle as soon as he got paid.

Going forward, Mr. Stevens said he intended to sock away six months of salary.

“No more fast food,” said Mr. Stevens, who lives in suburban Maryland. “Less entertainment. No more taking the kids out everywhere.”

https://www.nytimes.com/2019/01/28/us/politics/shutdown-cost-us-economy-11-billion-cbo-says.html

 

[Yaseen1]

u.s are digging their own grave they are drowning and their end and death is becoming closer everyday

 

[Three_Kingdoms]

Government Shutdown Is Over, So Where Is the Economic Data?
An assembly worker at a plant in Grand Rapids, Mich. Much of the periodic data on manufacturing and other economic activity has been delayed by the government shutdown, complicating forecasts and policy making.CreditRebecca Cook/Reuters

By Ben Casselman

• Jan. 28, 2019

The government is back. Government data, however, will have to wait awhile.

The partial government shutdown left forecasters, investors and policymakers without much of the data they rely on — just as concerns were mounting that the United States’ decade-long economic expansion could be nearing its end.

Now that the monthlong shutdown is over, it will take government statisticians time to collect and analyze delayed figures for retail sales, manufacturing, housing and other parts of the economy. On Monday, the Commerce Department said it would not be able to release an estimate of gross domestic product for the fourth quarter that had been scheduled for Wednesday.

That means that when officials gather Tuesday and Wednesday for a meeting of the Federal Reserve’s policymaking group, the Federal Open Market Committee, they will do so without access to much of the information they usually have. The timing is awkward: Fed officials have emphasized in recent months that with the economy’s direction uncertain, they will be paying particularly close attention to the latest data when making decisions on interest
rates and related matters.

“The F.O.M.C. have told us that policy has become increasingly data dependent, but what data?” said Joel Prakken, chief United States economist for Macroeconomic Advisers, a forecasting firm.

In practice, the central bank had already indicated that it did not plan to raise rates at this week’s meeting. But it isn’t just the Fed that is struggling with the lack of government reports. Economists, investors and business leaders have all been left without a clear view of the economy.

“We’re missing a lot of key releases at a time when the economy appears to be slowing,” said Nancy Vanden Houten, senior economist for Oxford Economics. “We’re missing data on retail sales at a time when it would be great to see if the shutdown is having an impact on consumer spending. We’re not getting trade data at a time when we’re in a trade conflict with China.”

The shutdown, which idled hundreds of thousands of federal workers and disrupted operations across the country, will also have a direct effect on the economy. The Congressional Budget Office on Monday estimated the economic cost at $11 billion, although much of that will eventually be recovered as operations resume.

Economists haven’t been flying completely blind. The Labor Department was unaffected by the shutdown, which meant that the Bureau of Labor Statistics was able to collect and release inflation, unemployment and hiring estimates as usual. The monthly jobs report, arguably the most closely watched indicator each month, will come out Friday as planned. And economists still had access to privately collected statistics on housing, consumer sentiment and other topics.

Still, the pause in funding mostly shuttered the Commerce Department, which houses the Bureau of Economic Analysis and the Census Bureau. That resulted in the delay of several closely watched reports. Last week, the Conference Board published its index of leading indicators — meant to be a sort of early-warning system for downturns in the economy — without three of its usual 10 components.

It isn’t clear how long it will take government releases to get back on schedule. The answer will probably vary: Data on building permits, for example, is collected by local officials and submitted to the Census Bureau; as a result, the government should be able to gather the information and produce estimates relatively quickly. Retail sales figures, however, are based on a monthly survey that wasn’t conducted during the shutdown.

The trickiest report is also arguably the most important: gross domestic product. The broadest measure of goods and services produced in the economy, G.D.P. is based on more than a dozen indicators, including several of the reports that were delayed. That means the government won’t be able to produce its estimate until nearly all the other data has been collected.

The Bureau of Economic Analysis said on Monday it would not release G.D.P. data this week and would also delay three other reports scheduled for this week and next, including statistics on consumer spending and international trade. The agency said it was consulting with the Census Bureau and other agencies and could not “say anything definitive about release dates” at this time.

It is possible the Commerce Department could end up skipping the initial estimate of G.D.P. and wait until late February, when it would ordinarily release the first of two revised estimates. That’s what happened after the 1995-96 shutdown, the previous record-holder for the longest shutdown.

The greater risk is that the delays in data collection could hurt the quality of the statistics once they are produced. Government surveys are meant to be conducted the same way, at the same time each month, to ensure that the data are consistent over time. Changes can raise the risk of errors, said Maurine Haver, president of Haver Analytics, a data provider.

“Surveys just simply aren’t being done, and in some cases will never be replicated,” Ms. Haver said.

Economists said the shutdown had most likely ended before serious damage was done. Most major releases will be delayed by weeks, not months. Still, disruptions like these could have longer-run consequences for the confidence people have in government statistics, said Tara Sinclair, an economics professor at George Washington University.

“The U.S. is really considered the gold standard in data for the rest of the world, and we’re kind of falling down on our job here,” she said.


https://www.nytimes.com/2019/01/28/...=RelatedCoverage&pgtype=Article&region=Footer

 

[oprih]

Good, rooting for trump to have more government shutdowns in the future.

 

[SBUS-CXK]

@Get Ya Wig Split Your low IQ makes you happy