There’s often a tenuous connection between the federal government and business, but the strongest link tends to surface when Congress is on the verge of gridlock.

By some estimates, there’s a better than 50 percent chance of a government shutdown by October, when a budget for 2016 must be passed.

And as a small business owner, you're likely concerned about a looming Congressional impasse, which could knock the wind out of the economy’s momentum--shaving the country's economic output and your sales figures in the process.  

A little-known consumer sentiment gauge, called the Policy Uncertainty Index, is actually keeping tabs on how everyone outside the Beltway is feeling about the political situation. The index offers a daily tally of political uncertainty, compiled by economists including Nick Bloom of Stanford University and Steven J. Davis of the University of Chicago’s Booth School. And it’s graded on a scale of 0 to 600, based on the mention of sets of terms revolving around the economy, uncertainty, Congress, legislation and regulation, among others, culled from thousands of newspapers around the country.

It turns out the index has jumped into territory that exceeds what it registered in 2013 at the time of the last government shutdown, notching well over 400 points. In fact, it’s closing in on a level last seen toward the end of 2012, when Congress stared down the fiscal cliff, refusing to authorize a new debt limit. At that point the scale went well over 500 points.

Economist and Lehigh University associate professor Chad Meyerhoefer says such indexes are better for examining historical data than predicting future events. Nevertheless, the failure of Congress to pass a budget and a potential government shutdown would certainly have negative ripple effects.

“When the government [shuts] down it limits the flow of fiscal funds to different parts of the economy, and that uncertainty can be damaging to the economy,” Meyerhoefer says.

But don’t take it from economists alone. Although most small business owners would probably prefer that lawmakers stay out of their way entirely, they really dislike political uncertainty too. In fact, 86 percent of respondents in this year's Inc. 5000 CEO Survey said they prefer a productive Congress to one beset by gridlock.

Here’s what some entrepreneurs from the survey had to say about congressional inaction, which has been painfully prevalent in recent years on everything from a much needed corporate tax overhaul to immigration reform and national infrastructure upgrades.

  • “Some basic collaboration and focus on fixing the government programs that are dysfunctional and investing in infrastructure. Petty political points are frustrating. However, [I] don't believe that one can count on the federal government to help solve problems.”
  • “I prefer a Congress that recognizes the challenges of our country outside of party lines.”
  • “We've seen what negative impact a gridlocked Congress can be. Unfortunately, I have never seen what a productive Congress is like.”

Hopefully enough politicians in Washington are listening this time around, because it’s clear no one has the patience for another, reckless shutdown.

Published on: Sep 23, 2015