Early local impacts of U.S. government shutdown appear negligible, officials say

Scott Colbert: Financial markets are not impacted so far.

Jaimie Trussell: Commodities are still coming in as normal to Crosslines food pantry.

Paul Satterwhite: Agencies enforcing federal employment laws will halt investigations amid the shutdown.

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As Congress reached a funding impasse Oct. 1, most of the federal government shut down for the first time in more than six years.

But several local officials say impacts from the shutdown appear to be muted in the short term. The shutdown, which is extending into its second week, started after Congress failed to come to an agreement on extending government funding at the beginning of the month. Democrats want to renew subsidies to cover health insurance costs, while Republicans and the Trump administration seek to preserve existing spending levels.

Scott Colbert, a St. Louis-based chief economist with Commerce Bank, said the early economic impact of the shutdown shouldn’t be significant. When it comes to delayed government services such as loans from the U.S. Small Business Administration, approvals from the Food and Drug Administration or funding for federal housing programs, local economic growth will slow but shouldn’t stall, he said.

“The initial impact is just almost zero. It’s almost negligible because most people can delay anything for about a week or two,” he said. “But to the extent that it drags on, that’s where it’s starting to affect (gross domestic product).”

As a result of the partial government shutdown, about 750,000 employees will be furloughed daily, according to the nonpartisan Congressional Budget Office. Others who work essential jobs, like air traffic controllers, federal law enforcement officers, military members and Transportation Security Administration agents, are asked to work without pay.

Under federal law, the furloughed workers are scheduled to receive back pay once the government reopens. Compensation for them will cost taxpayers $400 million every day, according to the CBO. In recent times, President Donald Trump has threatened to use the shutdown to slash the federal workforce, going against the long-standing practice of furloughing workers.

“Historically, in every government shutdown, every worker has been paid back every hour that they’ve missed,” Colbert said. “Normally, that’s made up fairly quickly. In this go-around, though, I think the administration is clearly threatening, and this administration doesn’t really threaten so much as it just simply does. There will be some clear firings – whatever you want to call them – layoffs, furloughs, but I think not everyone will be coming back to a job. Now, legally, they might have the right to come back to a job, but legally it might accrue somewhere down the road. But there’s going to be a near-term impact.”

As for the shutdown’s potential length, prediction markets suggest it could last a couple weeks or possibly longer.

On Kalshi, a federally regulated prediction market, the current forecast as of the morning of Oct. 9 implies the stoppage will last 29 days, up sharply in recent days as negotiations on Capitol Hill have stalled. On Polymarket, 67% of traders see the highest likelihood that the government will remain shut down between 10-29 days, as of Oct. 9. Around 33% expect it to last over 30 days, while less than 1% predict 4-9 days.

“If I was a betting person, and I guess I am, I would take the over on this of 14 days,” Colbert said. “The longer it accrues, there’s going to be a gradual and slow impact. Wall Street is largely ignoring that because of history, not lasting too long, everyone getting paid back.”

Operational overview
The shutdown is impacting air travel, with staffing shortages resulting in delays at major airports such as Chicago, Houston and Nashville, according to media reports. However, officials at Springfield-Branson National Airport said it’s been business as usual thus far.

“Several days into the shutdown, Springfield-Branson National Airport remains in communication with federal entities that work at the airport,” Ren Luebbering, marketing and communications coordinator for the airport, said in a statement provided to Springfield Business Journal. “We continue to anticipate no interruption to operations at SGF. Passengers should not encounter any change to their experience at the airport.”

Additionally, Luebbering said the airport doesn’t anticipate any risks of loss in federal funding at this point. The airport is amid a $4 million flooring replacement project, part of some $35 million in construction projects slated for completion in an 18-month period by the end of 2026. Some of those projects are receiving federal grants.

For SBA-backed loans, officials with Springfield-based OakStar Bank said they were quick to act when it became apparent to them that the shutdown was likely to happen. The bank was the No. 1 lender of SBA-backed loans in western Missouri and eastern Kansas during the agency’s most recent fiscal year, issuing 107 loans with a $91.3 million approval amount in 2024.

“Any loan that we got approved through SBA’s online system through their portal prior to the shutdown, we were still able to close,” said Micah Scott, OakStar’s chief lending officer. “We are a preferred lender with SBA, which means that we are able to underwrite and approve most of SBA loans in-house, so we don’t have to send them to SBA for approval.”

Scott said he doesn’t expect any issues once the portal is turned back on after the shutdown ends.

“For anything new that we’ve not approved prior to the shutdown, we can collect all the information from the borrowers. We can work on internal bank approval, and we can process everything internally,” he said, adding he was unsure how many loans that encompasses. “We just cannot actually approve the loan through SBA’s system, which of course means we can’t close that loan we’ve approved.”

According to the Department of Veterans Affairs website, roughly 97% of VA employees continue to work during the shutdown. VA medical centers, outpatient clinics and veteran centers remain open as usual and are providing all services. VA benefits also will continue to be processed and delivered, including compensation, pension and housing benefits.

As for a couple of federal food aid programs, funding is currently available to keep them operational, officials say. But how long that money lasts is an uncertainty. The Special Supplemental Nutrition Program for Women, Infants and Children, commonly known as WIC, is a discretionary program funded annually with both federal and state money. The Supplemental Nutrition Assistance Program, or SNAP, is paid for by monthly federal funding sent to each state.

Anna Kremer, spokesperson for the Springfield-Greene County Health Department, said its WIC clinics remained open and fully operational as of Oct. 8. Any changes in operation or community impacts would be promptly communicated with the public, according to a news release.

At Crosslines Community Outreach, CEO Jaimie Trussell said the nonprofit recently heard good news about SNAP from Ozarks Food Harvest Inc. CCO is among 270 partners of the food bank that distributes commodities to roughly one-third of the state.

“They put out an email telling us that for the time being, we are safe. We will not be seeing any reductions in the weekly shipment of commodity items that come over from Ozarks Food Harvest,” Trussell said. “The contracts were executed long ago, the produce has already been paid for, and so it will continue to keep coming.”

Still, Trussell said it’s not a forever solution because those contracts will eventually expire.

“We’re watching just like everyone else, hoping that we get to some kind of budget agreement so that we will not have to worry about it,” she said.

CCO provides social services such as a food pantry, foster care outreach and a women’s shelter. Roughly 36% of those who use the food pantry are on SNAP, Trussell said, roughly 4,500 people per month.

“We’re doing all the work behind the scenes for little disruption to our guests, but there’s a lot of uncertainty for anyone trying to figure out how long this will last and what it looks like if it continues,” she said.

National parks remain partially open during the shutdown, but buildings that require staffing are temporarily closed. That includes the visitor center at Wilson’s Creek National Battlefield, which is part of the national park system. Melissa Adler, executive director of Wilson’s Creek National Battlefield Foundation, said there are a few people with the organization that continue to work as needed, but most of the staff is furloughed.

“Staff size varies depending on the time of year but is generally around 20 people,” Adler said via email. “We are encouraging people to postpone their visit to Wilson’s Creek National Battlefield until it reopens. If people do choose to visit, we ask them to stay in designated areas, carry out trash and be safe. The tour road and trails are accessible during the shutdown.”

State of uncertainty
The continuation of the shutdown places some employers and employees in a state of uncertainty as they navigate issues such as work authorization and ongoing federal cases involving employment laws, says Springfield attorney Paul Satterwhite, partner with Spencer Fane LLP.

He said he received more than a dozen calls from clients in the few days after the shutdown started. The primary questions he’s hearing from employers involve the E-Verify system, which is a web-based tool, managed by the U.S. Department of Homeland Security, that helps employers verify the legal work authorization of new hires. It compares information entered by any employer from an employee’s I-9, an employment eligibility verification form, to records available to the U.S. Department of Homeland Security and the Social Security Administration, to confirm work eligibility. Nearly 1.4 million employers are enrolled in the system, according to the E-Verify website.

Spencer Fane released a client alert on Oct. 1, written by Satterwhite and Randi Winter, an attorney in the firm’s Minneapolis, Minnesota, office, to offer guidance about E-Verify and other federal issues that could be impacted by the shutdown. Satterwhite and Winter said E-Verify was disabled on Oct. 1, and they noted that was expected, as the system was temporarily unavailable during prior shutdowns, as well.

“It requires employers to use the alternative process, which is really the old paper process and submissions, which, if you’ve been doing something completely different for a lengthy period of time, is a large change in that process,” Satterwhite said. “They still have to stay in compliance. They still have to take the steps to make sure that if there’s an issue down the road with someone that they’ve hired, that they’ve gone through the I-9 verification process.”

U.S. Citizenship and Immigration Services recently confirmed that employers are permitted to continue using the remote I-9 document verification under the agency’s approved alternative review process, according to the law firm’s client alert. While USCIS operations will continue, field office staffing is likely to be reduced, and many visa and citizenship applicants who require verification through other agencies will likely see their applications put on hold. Additionally, the U.S. Department of Labor will stop processing prevailing wage determinations and other certifications required for many forms of work visas and green cards.

Satterwhite said most federal agencies that enforce federal employment laws will halt investigations and enforcement actions amid the shutdown. That includes the National Labor Relations Board, the Equal Employment Opportunity Commission and the Labor Department.

“For employers who have ongoing issues or matters pending with the federal agencies, very few of those are going to go forward during the shutdown,” he said.

He said an example is cases involving unfair labor practice charges.

“If someone has an EEOC charge pending, then those won’t be investigated during this. [If] they have an issue going on with the National Labor Relations Board, that will be paused during this time period,” he said.

Satterwhite said the shutdown will result in uncertainty for both employers and employees as they deal with federal agencies that regulate private and public employment.

“It creates challenges all the way from onboarding employees to issues that occur after termination, which is usually when the EEOC charge is filed,” he said. “For unionized employers, there can be impact during the time that employees are still employed.”

Satterwhite says he’s heard from law colleagues in other cities who have received even more calls than he has. He said he expects the calls will continue to come in but is unsure if the trickle-down effect of the shutdown will be limited or significant at this early stage.

“The intent of our client alert was to inform employers of the information we have, but even more so just to let them know that there’s a lot of uncertainty tied with this and that we’re going to be figuring it out as we go forward,” he said.

Since 1980, there have been 14 shutdowns. The longest shutdown in U.S. history was the most recent one, which lasted 35 days in 2018 and 2019. It stemmed from a dispute between President Trump and Democrats in Congress over a $5.7 billion funding request for a wall along the southern U.S. border, according to SBJ archives. 

The five-week partial shutdown cost the economy $11 billion, according to a CBO report. The CBO said most of that would be recovered once the shutdown ended but estimated a permanent loss of about $3 billion.

Investors are currently unfazed by the shutdown, Commerce Bank’s Colbert said.

“While the average person might be paying attention to the government shutdown, the markets are frankly very focused on everything technology, and it’s not impacted the financial markets even modestly yet,” he said.