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Restaurateur Michael Felts stands last spring at the planned site of Taco Habitat. Due in part to the government shutdown, Felts is uncertain when the project will move forward.
SBJ file photo
Restaurateur Michael Felts stands last spring at the planned site of Taco Habitat. Due in part to the government shutdown, Felts is uncertain when the project will move forward.

US shutdown stifles economic strides

Posted online

Entrepreneur Michael Felts isn’t a government worker, but he’s now among those impacted by the partial government shutdown, which on Jan. 12 officially became the longest in U.S. history.

The U.S. Small Business Administration is one of the government agencies and departments that furloughed employees in response to the shutdown started Dec. 22. The shutdown stems from a dispute between President Donald Trump and Democrats in Congress over a $5.7 billion funding request for a wall along the southern U.S. border.

Felts said he had an SBA loan for his restaurant project scheduled to close Dec. 27. He applied for the $1.3 million loan in August, and having used SBA in the past for loans, he was prepared for a wait. Felts said the loan would help fund the Springfield location for Taco Habitat, a restaurant featuring a modular construction involving shipping containers. The eatery is planned for the Glenstone Marketplace, 3333 S. Glenstone Ave., with a second site scheduled later this year in Branson.

“I knew going in it was going to be a long process,” he said of securing the loan.

The days leading up to the closing were complicated after an SBA lender contacted Felts about a week before Christmas. He learned he needed to complete a geotechnical study for the land where his restaurant would sit. The study would cost roughly $15,000, he said, and he couldn’t hire a firm to complete it before the shutdown.

Now, he’s in a holding pattern and concerned about rising costs he’s going to have to pay. Boxman Studios, a North Carolina-based company that constructed and designed the taco shops, told Felts on Jan. 3 that due to tariffs the cost for materials would be increasing 15-30 percent, which he said could increase his loan by roughly $300,000 – equating to a total near $1.6 million.

Impactful position
Standard & Poor’s Financial Services LLC estimates the shutdown is currently costing the U.S. economy $1.2 billion per week. Some of that loss will be recouped, however, once federal workers receive back pay, with Congress already approving legislation for more than 800,000 employees who haven’t been paid since the shutdown started last month. Trump signed the bill Jan. 16.

Going into the shutdown, the national economy was in great shape, said Steve Mullins, professor of economics at Drury University. But the longer it continues, the potential negative impact on the economy gets larger, he added.

“You have to worry a little bit about it,” he said, adding volatility in the stock market, along with the ongoing trade dispute with China and rising interest rates, contribute to increasing uncertainty.

“Anything that shakes business and consumer confidence can harm the economy,” Mullins said. “It’s hard to put a dollar figure with that.”

The shutdown has a direct effect on workers who are currently missing out on income, he said, along with an indirect effect as those same employees will spend less in their local economies. Mullins said there’s a lot of micro effects as well, depending on what government activities or services the general public is not able to access during the shutdown – such as an SBA loan.

Economic uncertainty also can result in consumers delaying the purchase of big-ticket items, he added.

“If those purchases are postponed, that can have an impact on the economy today,” he said.

In Springfield Business Journal’s Jan. 11-17 online poll, 52 percent of the 234 respondents said the government shutdown has not affected them or their business, 35 percent reported it has and 13 percent noted they are unsure or it’s too early to tell.

Federal aid
For those federal workers who have been impacted locally, some agencies and businesses have been making efforts to provide some aid.

Ozarks Food Harvest set up a food pantry Jan. 15-17, specifically for impacted federal employees, while Alamo Drafthouse Cinema is currently running a promotion through January that gives furloughed federal workers a ticket a day to see a movie at the Springfield theater, 4005 South Ave.

In addition, Community Foundation of the Ozarks and Multipli Credit Union, formerly CU Community Credit Union, announced in a Jan. 14 news release a partnership on a no-interest loan program for furloughed employees in Greene, Christian, Dade, Dallas, Lawrence, Polk and Webster counties.

Through the Multipli and CFO program, employees who are not receiving paychecks can apply for up to $1,500. As of Jan. 16, six applications had been received, according to Multipli spokeswoman Alisa Lawler.

CFO is making an interest-free charitable investment up to $500,000 to the credit union to fund the loans. The loans require a minimum credit score of 620, according to the release.

In the air
While shipping containers for Felts’ restaurants won’t be flown to the Ozarks anytime soon, the government shutdown’s impact hasn’t had any direct effect thus far on those wishing to fly out of Springfield.

Kent Boyd, air service development manager with the Springfield-Branson National Airport, said Transportation Security Administration and Federal Aviation Administration employees continue to work at the airport. Boyd said he was uncertain of the number employed by the agencies at the airport, and Cheston McGuire, press secretary with the American Federation of Government Employees, did not respond by press time.

TSA and FAA workers are considered among federal employees deemed essential who are working without pay. Federal workers impacted by the shutdown missed their first paycheck Jan. 11.

“I haven’t seen any slowdown here,” he said, regarding wait times at the airport’s TSA screening area. He added he’s unaware of any reduction in personnel or people not showing up to work.

“Right now, as near as I can tell and from the public perspective, it seems like business as usual,” he said. “If I see a line backing up into the lobby, then I’ll know something’s going on.”

Waiting game
As Felts waits on the SBA, he knows the anticipated loan amount’s increase means it will have to be resubmitted to the government agency. As a result, he could find himself behind a long line of other SBA loans piling up.

“We have to wait for the government to reopen before we can submit. I have no clue,” he said of the timeframe when a Taco Habitat will open its doors in the Queen City. “I try to focus on all the other things I can control. It’s a tough situation to be in.”

With the government shutdown now extending beyond the previous record of 21 days in 1995-96, Mullins said the country is in unprecedented territory, and the average Joes are the ones paying the price. Neither he nor Felts have a lot of confidence the impasse is on the verge of ending.

“I haven’t seen anything from the president or the Democrats that will solve this anytime soon,” Mullins said.

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