Many people in Canada paying attention to the current news stories may have taken notice of the fact that the government of the United States might effectively shut down on October 1. Congress has not approved an extension of the federal budget, which would require many federally-funded services to cease until the money gets flowing.
The main issue is over the Affordable Care Act, which Democrats want to remain intact and Republicans want to tweak or get rid of entirely, otherwise they won't approve the budget. As the deadline looms closer, it looks as if this shutdown will occur, though there is no saying how long it will last.
Canadian small business owners might be watching with some trepidation. Sure, this is occurring in the U.S., but many are wondering what the effects could be here. There will likely be consequences in Canada that company leaders might want to prepare for.
Our economies are linked
The fact is, when the American economy is performing well, Canada benefits. However, as The Financial Post pointed out, the opposite is also true.
"Anything less than solid U.S. growth would pull us down as well," the news source stated, indicating that if the shutdown lasts long enough, there could be devastating effects on the GDP and the expensive federal bond-buying program.
The newspaper also noted that this is unfortunate timing, as Canada's economy has been rebounding nicely as of late and optimism is up among business leaders.
Stock market losses might change consumer habits
One impact that's already been seen is the fact that the Toronto stock market has been dropping in preparation of a U.S. economic crisis. The Canadian Press reported that as of September 30, the Toronto stock market's S&P/TSX composite index fell by 85 points, though the Canadian dollar has shored up slightly, gaining fractions of a cent to reach $0.9713 cents U.S.
The news source detailed that the American stock market has performed decidedly poorly recently as concerns about the potential shutdown seemed to gain more clout.
If the stock market isn't performing well, this has direct effects on consumers' finances. Should the economic situation in Canada become affected by the situation to the south, many individuals might start saving rather than spending, which would then negatively impact companies.
As such, this might be a time when Canadian company owners should pay attention to world events and consider taking action in their own offices. For instance, until the situation is settled, cautious leaders might be hard-pressed to take risks like hiring, buying a second retail location, launching a new product line and so on.