Report: Employers in dumps over shutdown fallout

BOSTON -- The prolonged federal government shutdown is bad for business, according to a new report, which found pessimism is increasing among the state's employers as the stalemate in Congress grinds on.

The latest Business Confidence Index, compiled by the pro-business group Associated Industries of Massachusetts, shows overall enthusiasm among employers slipped one point to 46.5 on a 100-point scale in October.

That's the eighth consecutive month the index fell below the 50-point mark, which is considered pessimistic territory among employers, and the first time since the COVID-19 pandemic in 2020, the group said.

It attributed weakening confidence to employer uncertainty about a host of federal policy initiatives under the Trump administration, including the impact of the shutdown, global tariffs and a pullback of federal research funding.

Meanwhile, the government shutdown is "hindering" analysis of the economy as federal agencies have suspended collection and processing of most official statistics, the report's authors wrote.

"The economy remains resilient with the Federal Reserve noting that economic activity 'has been expanding at a moderate pace.' At the same time, the labor market is softening -- employment has decelerated, and long term unemployment has risen," Sara Johnson, chairwoman of AIM's board of economic advisors, said in a statement.

"Because the labor market is a major pillar of consumer spending, any sign of widening job losses or weakening wage gains would be a red flag."

The high productivity rate that has traditionally allowed Massachusetts to increase economic output faces "challenges" from changes in federal policy, said BEA member Alan Clayton-Matthews, a professor emeritus of economics and public policy at Northeastern University.

"Tariffs and reductions in research-and-development spending create issues for productivity while an aging demographic affects labor-force participation and tightening immigration policy affects population," he said.

The report, which surveyed 140 Massachusetts employers, quoted unnamed employers describing how tariffs and a decline in federal government contracting is hurting their bottom lines.

The federal government shutdown entered its 35th day Monday, tying the record for the longest in U.S. history, with no apparent end in sight.

A Republican-backed funding bill has failed 13 times in the Senate amid opposition from Democrats -- including Massachusetts Sens. Elizabeth Warren and Ed Markey -- falling short of the required 60 votes to pass.

Thousands of federal workers have been furloughed or gone without pay, and the shutdown has become increasingly partisan as Democrats hold out for a bill that would renew expiring subsidies for the Affordable Care Act. Both sides accuse the other of creating the impasse and refusing to compromise.

Over the weekend, President Donald Trump urged Republicans to "go for" the "nuclear option," by eliminating the U.S. Senate's filibuster -- a rule that requires 60 votes of its 100 members to pass spending bills and other major legislation.

Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group's newspapers and websites. Email him at [email protected].

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