Study Shows Shutdowns Make People Spend Less Money

A new study from New York University looked at the 2013 government shutdown. The researchers wanted to see how it affected the economy.

They found that people who did not get their paychecks quickly cut their spending by almost 10%. These federal workers spent less on food, clothes, and electronics. Even people with good savings reduced their spending.

Workers who were sent home cut their spending even more – by 15% to 20%. They had more free time, so they cooked at home instead of eating out. They also watched their own children instead of paying for child care.

This drop in spending affects local businesses. In areas with many government workers, shops and restaurants can lose a lot of money.