Government shutdown could be costly for Hampton Roads, economist says

NORFOLK, Va. - Lawmakers face a midnight deadline to cut a deal or face a government shutdown, which could have a big impact on the economy here in Hampton Roads.

"If the federal government shuts down, even partially, you can imagine that means 40% of Hampton Roads economic activity slows down or stops," said Dr. Robert McNab, an economist from Old Dominion University, noting how reliant the area is on the federal government.

If a shutdown does happen, essential personnel, like military members, still have to report, but unless Congress acts they wouldn't get paid. In addition, the areas tens of thousands of federal employees could be told to stay home in a furlough. "The most significant impact will be on the contractors, who will not be able to work and won't be paid for the time lost," McNab sad.

The government shut down in 2013 for more than two weeks. If that happens again, McNab says it could really hurt people's pockets. "As the shutdown goes on and goes from days into weeks, we'd seeing a slowing in the local economy," he said. "People wouldn't go to restaurants," among other activities.

Local governments are watching too. The City Manager of Hampton, Mary Bunting, released the following statement:

Temporary federal government shutdowns do not impact City operations, such as an inability to pay employees or run programs; however, we are nevertheless concerned. 

Hampton — like the entire region — has more people employed by the federal government than most areas, so we would have more people furloughed. If federal employees aren’t getting paychecks, they aren’t always able to make payments on time, much less spend money on restaurants and retail. Lenders here tend to be forgiving, but we would likely see a slowdown in the local economy if workers are furloughed. 

Hampton has not experienced a federal government shutdown that has inhibited our ability to provide services to our citizens, and we do not expect that this would be any different.