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Illustration: Sarah Grillo/Axios

The check isn't in the mail: 800,000 federal workers are set to miss their second payday this month, with no reprieve in sight as the shutdown approaches Day 35.

Why it matters: The drought of federal worker paychecks — not to mention the contractors who will never be repaid for their furloughs — is starting to sting surrounding businesses, with escalating dangers for the broader economy.

Details: A Philadelphia store owner who serves federal workers told KYW Newsradio that the workers will eventually get paid, but his shop won't recoup the lost business.

  • "We’re actually going to have small business, very soon, impacted negatively because we can’t get an SBA loan," Huntington Bancshares Inc. CEO Steve Steinour told WashPost today.
  • AP reports: "It’s hard to know just how much the shutdown is depressing consumer spending because the Commerce Department, which compiles and reports such data, was itself closed by the shutdown."

The bottom line: "[A] sustained decline in sentiment raises the probability that consumer demand further slows in the near term," Bank of America economists said today, per Bloomberg.

The big picture: 40% of American adults couldn't afford a $400 emergency, according to Fed data released in 2018.

  • Now imagine that your emergency is two missed paychecks in a row, when you've done nothing wrong on the job.
  • Then imagine how — when you eventually get back to work and get your backpay — how your spending habits could change if you were in that position.
  • As those Bank of America economists note: "[L]ost consumption may not be fully made up once the shutdown ends as we find the consumer more cautious in their spending habits."

What's next: The two Senate bills to re-open the government both failed today.

P.S. Secretary of Commerce Wilbur Ross, with a net worth in the hundreds of millions, said on CNBC today he doesn't "quite understand why" federal workers are going to food banks instead of getting loans to survive the "liquidity crisis."

  • "These are basically government-guaranteed loans because the government has committed, these folks will get back pay once this whole thing gets settled down."

Go deeper: All the ways Americans are feeling the effects of the shutdown

Go deeper

Updated 4 mins ago - Politics & Policy

Inauguration Day dashboard

U.S. Capitol and stage are lit at sunrise ahead of the inauguration of Joe Biden. Photo: Patrick Semansky - Pool/Getty Images

President Biden has delivered his inaugural address at the Capitol, calling for an end to the politics as total war but warning that "we have far to go" to heal the country.

What's next: Biden has arrived at the White House and he will sign executive orders and other presidential actions.

32 mins ago - Podcasts

Podcast: After the Biden inaugural

Joe Biden was sworn in today as America's 46th president in an inauguration unlike any other in modern history.

Axios Re:Cap goes deeper into the speech, the atmosphere and what it all tells us about the incoming administration, with Axios political reporters Hans Nichols and Alexi McCammond.

Biden embarks on a consequential presidency

Photo illustration: Sarah Grillo/Axios. Photo: Joe Raedle/Getty Images

Donald Trump tried everything to delegitimize the rival who vanquished him. In reality, he's set Joe Biden on course to be a far more consequential U.S. president than he might otherwise have become.

The big picture: President Biden now confronts not just a pandemic, but massive political divisions and an assault on truth — and the aftermath of the assault on the Capitol two weeks ago that threatened democracy itself.

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