U.S. companies warn government shutdown will hurt business, economy

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U.S. companies warn government shutdown will hurt business, economy

(Reuters) – The partial shutdown of the U.S. government that entered its 35th day on Friday is stoking fears of a wider slowdown on the world’s largest economy.

Economic growth is expected to take a hit in the current quarter because of the shutdown, a Reuters poll of economists showed on Friday, while a dearth of data is already impacting traders in U.S. fixed income and currency markets.

U.S. companies say the shutdown is hurting their businesses and can cause more damage if it persists.

Here is a sector-wise breakdown of how some of the biggest U.S. companies have reacted to the government’s shutdown:

FINANCE

Morgan Stanley – Chief Executive Officer James Gorman said it would be extremely negative for the initial public offering market if the shutdown goes on much longer.

“This is not the way the U.S. should be working,” Gorman said, speaking in a CNBC interview at Davos.

JPMorgan Chase & Co – J.P. Morgan economists reduced their outlook for U.S. economic growth in the first quarter to 1.75 percent from 2 percent as the shutdown has stretched to a second month.

CEO Jamie Dimon said the shutdown will hurt the economy if it persists. “We don’t know exactly what it is going to do, but it is not a positive,” he said on a conference call.

Carlyle Group – Co-executive Chairman David Rubenstein said at the Word Economic Forum at Davos that if the shutdown continued much longer, it could “really impair the economy of the United States.”

Citigroup Inc – The bank said it was yet to see an effect on business from the shutdown, but that could change if the shutdown continued.

BlackRock Inc – CEO Larry Fink warned the shutdown will hit economic growth temporarily.

CONSUMER

Procter & Gamble Co – CEO David Taylor says if the shutdown continued, it would be a serious concern.

Tiffany & Co – CEO Alessandro Bogliol says issues such as Brexit, protests in France and the U.S. shutdown “makes me more cautious” about sales and earnings forecasts, and said he expects a couple of “very tough” quarters.

VF Corp – The company said the shutdown has the potential to delay the public filing of Kontoor brands.

AIRLINES

SouthWest Airlines – The company said the shutdown had knocked between $10 million and $15 million off its revenue so far in January.

American Airlines Group Inc – The company said there has been some slowness in 0-14 day bookings due to the shutdown, but is yet to determine a dollar value from the shutdown’s impact.

Federal Aviation Administration’s approval of two Boeing MAX 8 aircraft that the company has taken delivery of, is on hold due to the shutdown.

JetBlue Airways Corp – CEO Robin Hayes said the U.S. aviation system is nearing a “tipping point” due to the partial shutdown, which may cause delays, long lines and canceled flights.

Delta Air Lines Inc – The partial government shutdown will cost $25 million per month as government workers reduce travel, the company said.

Delta said that Airbus A220 start date is likely to be pushed back due to the shutdown.

United Continental Holdings Inc – The airline has seen pockets of issues, but no big impact on fly waits. United said it would have a better sense of the impact after the first quarter.

ROAD TRANSPORTATION

Roadrunner Transportation Systems Inc – The company revised the timing of a rights offering due to the shutdown.

AUTOMOTIVE

Fiat Chrysler Automobiles – CEO Mike Manley said at the Detroit Auto Show that the shutdown had delayed final certification of FCA’s new RAM 3500 heavy-duty pickup truck, one of its most profitable segments.

Ford Motor Co – The company said some vehicles could be delayed if the shutdown continues another 30 days.

COMMUNICATIONS

T-Mobile US – CEO J. Braxton Carter said any delay was a concern as its prepaid business, roughly 30 percent of sales, was “particularly sensitive” to tax refunds.

ENERGY

Enterprise Products Partners LP – The shutdown has delayed the firm’s plan to build a major U.S. crude export terminal off Houston, blocking the pipeline operator from filing paperwork with U.S. regulators.

HEALTHCARE

Aimmune Therapeutics Inc – The biotech firm was notified by the FDA that as a result of the shutdown it will not start a review of company’s Biologics License Application (BLA) for Ar101 – an oral immunotherapy for treating peanut allergy in children.

INDUSTRIALS/MATERIALS

Boeing – The aircraft-maker said the shutdown has not had a material impact on its business to date, but it may begin to weigh on its operational efficiency and pose other challenges for the aviation sector in general, CNBC reported on Wednesday.

Bemis Co Inc – The closing date for the company’s $5.25 billion takeover by Amcor Ltd has been delayed by a quarter with Amcor citing regulatory logjam due to the shutdown.

INFORMATION TECHNOLOGY

Microsoft – President and chief legal officer Brad Smith told CNBC, “It is not good for business. The sooner we can come together, the better off we’ll all be. We can debate forever how much damage a closed government will cause to the economy, but there is one thing that is indisputable: it doesn’t help.”

(Compiled by Aaron Saldahna, Agamoni Ghosh and Susan Mathew in Bengaluru)