Grocers face pressures from government shutdown

October 03, 2013

The longer the shutdown, the greater the potential impact on federal services and consumer spending.

What do circadas and Congress have in common? Both did the unlikely this year.

The circadas surfaced, and Congress shut down.  

During the 17 years since either of these happened, U.S. food retailers have seen contentious battles at the federal level, though politicians always stepped back from the cliff.   With no telling how long the current shutdown might last, The Lempert Report feels grocers should know the potential financial, regulatory and food-safety impact on their stores.

A spending chill could result from this week’s furloughs of more than 818,000 of nation’s 2.1 million federal employees.  Any delays in Social Security payments due to workforce reductions—which NBC suggests could happen—would possibly compound the effect on food and beverage purchases in supermarkets.

To help retailers manage the overall impact of the shutdown, the National Grocers Association issued a summary of its research of federal agencies.  Among its findings:

  • The Supplemental Nutrition Assistance Program (SNAP) will continue to operate.  Eligible households will receive monthly benefits for October.
  • Expect new vendor SNAP applications to be halted or delayed, though NGA was awaiting more information the U.S. Department of Agriculture (USDA).
  • NGA understands that food-safety inspectors are “essential,” so they’ll continue to work and be paid retroactively once Congress approves funding.  This includes FSIS meat-plant inspectors.  Expect product recalls to continue, and fewer investigations.
  • Expect the U.S. Department of Labor to suspend most operations and furlough more than 80% of its staff.
  • With just 5% of its staff on hand, the Equal Employment Opportunity Commission would be limited to essential functions such as receiving discrimination charges and litigating lawsuits the courts don’t extend.
  • The National Labor Relations Board plans to furlough all but 11 of its 1,611 employees, effectively suspending core operations and services.
  • Social Security, Medicare and Veterans benefits will continue, though with delays in processing new applications.
  • Unemployment insurance will continue, though an extended shutdown may cause delays.