Government shutdown poses increasing risk to wider economy

WASHINGTON – As the government shutdown enters a second month, economists say it could pose a threat to the wider economy.

The biggest effect is likely to be the cutback in federal spending. But consumer spending is another important factor.

When government employees spend less, stores and restaurants that serve them suffer. So do landlords and lenders that do business with federal workers. Spending and growth will probably rebound once the government reopens, but most of the restaurant meals missed and hotel stays cancelled will never be made up.

John Sprinkle is a furloughed federal employee. He and his wife would normally be planning their summer vacation. But not now. The family is putting off the purchase of a new computer and postponing eating out and attending events.