The US government shutdown is a game of “brinksmanship” which should not damage the cosmetics industry, according to Euromonitor.
Tim Barrett, an associate researcher at Euromonitor International, says that he believes business will go on as usual despite the temporary halt of many state services and organizations like the FDA.
He also put the risk of a disastrous government default on debt at “close to zero.”
Barrett told CosmeticsDesign.com USA: “We here in the States have pretty much become inured to the brinksmanship in Washington, so I would imagine that this government shutdown will do little other than incense the already upset even more.”
One possibility - although an unlikely one - is that the two parties will fail to come to a compromise before the so-called ‘debt ceiling’ is reached at the end of October.
This could leave the US temporarily unable to pay its debts, damaging the value of government treasury bonds and send shockwaves through the global financial system.
Speaking at the APEC conference, US Commerce Secretary Penny Pritzner warned governments that the shutdown was beginning to affect business, and markets are dipping slightly as investors are spooked.
However, as Barrett commented: “If the government defaults next week, you might very well see a lowering of the US credit grade and a run on US stocks/the dollar which would be a substantial negative shock to employers and consumers alike.”
“But despite all the bickering and posturing, the likelihood of this happening is close to zero and everyone knows this, which is why everything is pretty much operating as normal.”
One definite effect of the crisis on the cosmetics industry is the partial shutdown of the FDA, which will limit the organization to “essential” activities and those funded by user fees.
Activities which will be temporarily discontinued include “routine establishment inspections” and some compliance and law enforcement activities, along with some research.
Around half of the organization’s employees will also be furloughed for the duration of the shutdown.