Is the US Government Shutdown's Impact Spreading to the Supply Chain?

On Sunday Eastern Time, US Treasury Secretary Scott Bessent again warned about the widespread economic impacts of the federal government shutdown.

He pointed out that holiday shopping could be affected by the government shutdown and the corresponding reduction in air traffic. Bessent emphasized that decreased flight activity impacts not only travelers but also cargo transportation.

In a recent interview, Bessent stated, "We saw the impact on the economy from day one, but it's getting worse. For the past two quarters, under President Trump's leadership, our economy performed exceptionally well. Now some estimate that if the government shutdown continues, economic growth this quarter could be cut in half."

Bessent specifically mentioned the "human cost" of the Federal Aviation Administration (FAA) reducing its flight schedule, noting, "By Thanksgiving, we will have the busiest travel days of the year."

"But on the other hand, the movement of goods has slowed down too. So, you know, we could end up with shortages, whether in our supply chain or for the holidays. The movement of both goods and people is slowing down here," he said.

The US government has been in a shutdown since early October, which has now lasted a full 40 days, setting a record for the longest sustained shutdown in US history. Due to the prolonged shutdown, a large number of US air traffic controllers have been forced to work without pay, leading to significant absences in these positions.

Air traffic controllers and TSA security screening officers are among the essential government workers required to work during a shutdown. However, with the US government unable to issue paychecks, some workers have had to take absences to seek part-time work, as otherwise they would struggle to afford living costs.

Furthermore, it has been pointed out that even before the shutdown, US air traffic controllers were already understaffed.