News and Tribune

October 16, 2013

Federal workers, financial experts still cautious

A temporary deal could lead to more worry in a few months

NEWS AND TRIBUNE
newsroom@newsandtribune.com

> SOUTHERN INDIANA — Even with a nearly last-hour compromise to end the partial government shutdown Wednesday night, many of the federal employees in Jeffersonville were not relieved.

Mary O’Rourke, union steward with the American Federation of Government Employees Local 1430, said a lot of her fellow Census Bureau workers are still worried that the government shutdown will continue and many have filled out applications for other jobs. She added that the census workers have stopped short of taking a second job, for now.

“We’re scared that we’re not going back,” O’Rourke said. “If they called me and told me to come back right now, I’d be ready to go back to work. We need our jobs. We want our jobs.”

O’Rourke — and a lot of her fellow federal workers — are angry that they’ve been kept away from work for 16 days.

“We actually thought it would be resolved before now,” she said. “I really, really did not think it would last.”

She’s also upset that Congress delayed the vote until Wednesday evening.

“Why don’t they just do it now?” she asked during an interview early Wednesday afternoon. “We wouldn’t wait to finish our job until after dinner. I would tell them you all need to get to the table and solve this problem, and I don’t think they should get paid until they figure this out; quit squabbling and quit pointing fingers.”

O’Rourke added that many of the bureau’s workers never believed they would be furloughed and that Congress would be able to reach a last-minute deal. But because no deal was made, she said many of the federal employees locally have been left searching for what to do.

“They are hurting,” she said of her fellow workers. “A lot of the people there survive paycheck to paycheck.”

For now, unemployment, even though it may take a few weeks to receive, has been able to bridge the gap for many workers. And as long as the workers can cover their basic expenses, like utilities and rent or a mortgage, they’re willing to forgo job hunting, O’Rourke said.

“We all applied for unemployment,” she said. “When I went down to apply for unemployment, half the Census Bureau was there.”

Another level of uncertainty exists if Congress is only able to compromise on a temporary deal.

“Oh God, I hope they figure something out, we can’t go through this again,” O’Rourke said when asked if it is a temporary deal that is reached. But she added that if the bureau workers are aware the federal shutdown ends on a temporary compromise, the workers would prepare for another shutdown a lot better.

“If they don’t do this, it’s going to affect everyone across the U.S.” she said.



FINANCIAL MARKETS

The budget agreement Congress reached Wednesday cheered investors and removed the threat of a catastrophic debt default that could have triggered another recession.

Yet the temporary nature of the deal means a cloud will remain over a sluggish U.S. economy that was further slowed by the government’s partial shutdown.

Political fights over taxing and spending will persist over the next few months. The risk of another government shutdown and doubts about the government’s borrowing authority remain. Businesses and consumers may still spend and invest at the same cautious pace they have since the Great Recession officially ended more than four years ago.

The agreement, approved by the House and Senate late Wednesday, will reopen the government but only until Jan. 15. The deal would enable the United States to keep borrowing to pay its bills, but not past Feb. 7.

The stock market soared on the news. The Dow Jones industrial average jumped 206 points. Bond investors celebrated, too. They sharply drove down the yield on the one-month Treasury bill, which would have come due around the time a default could have occurred. And the yield on the 10-year Treasury, a benchmark for rates on mortgages and other loans, fell.

Jeffersonville investment adviser Jay Conner with Capital Asset Management, says markets respond almost immediately to news — whether it’s good or bad.

“Now, anything that comes between now and the president actually getting the bill to his desk, the House leaders decide to do anything differently or anything else, you’ll see market action that way,” Conner said Wednesday afternoon. “But [the deal] should be a good thing, because in general, markets don’t like a lot of unnecessary and chaotic actions. Markets like things to be steady and known.

“Anytime you introduce surprises, that’s when it starts to get a little jittery on you, and you don’t want that. So a deal will be good for the market as a whole.



THE REGION

Uric Dufrene,  executive vice chancellor of academic affairs at Indiana University Southeast, called a deal “significant for the region.”

“Any default would have caused an increase in interest rates, and this would have taken some of the oxygen away from local [economic] recovery,” he said.

He said a jump in interest rates would reduce the demand for durable goods, such as automobiles, and would have negatively impacted the national housing recovery.

“Manufacturing did see growth in the region, and this growth is tied to automobile production, and more recently, recovery in the national housing market,” he said. “Higher interest rates, as a result of the default, would have taken the wind from the sails of the regional recovery.”

Dufrene said that uncertainty is not desirable for any type of investment.

“Households are willing to invest and buy goods and services if macroeconomic conditions are certain, and the same applies for business,” he said. “Any events that introduce uncertainty into the macro environment will adversely impact consumer confidence and the willingness of business to invest in capital equipment and expansion.

 — Staff writers Matt Koesters, Braden Lammers, Daniel Suddeath and The Associated Press contributed to this report.