Certified financial planner Michael Berkhahn talks about some of the biggest ripple effects for Florida as a government shutdown continues.

Florida

The US government shutdown, now in its third week, is causing widespread economic disruption. Federal workers are not receiving pay, small businesses are missing out on government loans and contracts, and states like Florida are losing approximately a billion dollars each week. With 155,000 federal employees in Florida alone affected, local businesses are also seeing reduced consumer spending, and food assistance programs are experiencing increased demand.

Financial experts advise those impacted to prioritize essential expenses and manage debt obligations carefully. While the shutdown is creating immediate financial strain for many households, historical trends suggest that financial markets tend to recover once the government reopens. However, the psychological and long-term financial effects on families may persist beyond the shutdown period.

What the government shutdown means for your wallet

Welcome back. It is 842 on this Saturday morning and as we've been reporting this government shutdown in this edition of Matt on the Money, we're now in week three. The federal government shutdown impacts are piling up, federal workers not getting paid, small businesses are not getting loans, Florida's economy is losing nearly a billion dollars a week and we have Michael Burkhardt, a certified financial planner and vice president at Graham Capital Wealth Management back here with us to break down what this shutdown means for the economy, the markets, your money. Michael, welcome. Good morning, Matt. Thank you. It's good to see you. So I want to start with the biggest economic ripple effects we're seeing from the shutdown right now in Florida and elsewhere. Yeah, so government spending accounts for about 26% of our, you know, country's, you know, GDP growth here in the United States. So each week that this government is shut down, the country is losing about 15 billion dollars. Here, as you just mentioned, the state of Florida is losing on, you know, about a billion dollars per week. Yeah, we're seeing a billion, four billion dollars per month is the figure they gave us. It's a billion dollars a week. Florida's got over 155 federal workers. How does that loss or that that loss of pay impact local businesses and small businesses? Yeah, as you mentioned, we have 155,000 federal employees here in the state of Florida that are either being furloughed or working but not receiving payment. So they're having to make difficult decisions and not going out and spending, you know, their money in restaurants or local coffee shops where they typically would. So these are small businesses that are being impacted from the government shutdown. Plus, there's a lot of government, small businesses that rely on government contracts that aren't receiving payment for services that they have provided. And when you factor in how hot inflation has been as well, it was already a tough economy. So when you've got a lot of federal workers who are skipping a paycheck, that stuff makes it 10 times tougher. Oh yeah, absolutely. And for people who are on fixed income or maybe they're waiting on their benefits, what should they be doing right now to stay financially ready? Yeah, I think right now for people that are that are being furloughed or, you know, that just have are not receiving that that paycheck that they typically would, it's making that difficult decision on what is essential and what is non-essential. And it's it's it's saying, hey, maybe we can't go out to the restaurant, we can't go to the local coffee shop and spend money where we typically would. But focus on those those debt payments, like their car payments, mortgage payments, just so they don't get backed up on having to potentially lose those goods. I was just looking at a news report talking about how soup kitchens and food assistance is already backing up all over the U. S. From federal workers who have missed that paycheck. And now they're saying, hey, having a hard time with groceries from an investment standpoint. Is this something that investors need to act on? Or is it a time to just kind of hold tight and ride this out? I think it's something that we we have to just kind of look through the noise on, unfortunately, when it comes to financial markets with the government being shut down. Historically, financial markets do look through these government shutdowns because they are temporary, they are temporary. So markets typically do not pull back because of a government government shutdown. I would just mention, you know, just the last government shutdown, which was the longest one on record, was 35 days. You know, the stock market was up 10% at the end of at the once the government reopened. Isn't that incredible how you can have a government shutdown last that long in the market is just behaving completely independently, doing something totally different. If this does drag into a fourth week or longer, what's the most serious risk for everyday families? Would you say? I think it's the psychological effect that it has on individuals and households. We already know finances are, you know, the number one cause of financial strain within the household and marriages. So I think it's just the compounding effect of people having to make those difficult decisions on what they should be spending their money on. Uh, and then also the impacts because just because the government reopens and they get a paycheck, you know, they might be behind on on a credit card now that that interest rate has, you know, that the interest has compounded. So they're being affected by that. Thanks, Michael. And next hour we're gonna shift to the markets and ask whether investors should be spooked this october. We know october has got kind of reputation, so we'll be back with Michael next hour.

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Breakdown