Is The Government Shutdown Affecting Auctions?

Tuesday, October 15, 2013 | Blog

Farmers especially are struggling to make critical marketing decisions without being able to access to vital agricultural reports. These reports are casualties of the federal government shutdown. Farmers and livestock producers use the reports put out by the National Agriculture Statistics Service to make decisions; how to price crops, which commodities to grow and when to sell them, also to track cattle auction prices. Not only has the NASS stopped issuing new reports about demand and supply, exports and prices, but all websites with past information have been taken down. For example, during the shutdown, the USDA won’t provide sales reports from Oklahoma livestock auctions that are used to help set prices on the Chicago Mercantile Exchange.

Cuts to the number of FDA inspectors was one of the expected outcomes of the government furlough, but food safety experts are now warning that the longer Congress goes without appropriating funds, the greater the effect may be on consumers across the country. In the fish industry, the daily fish auctions rely on the government to “Grade” the fish in order to price effectively. Competition and cooperation are so intertwined that whatever price is set at auction that day becomes the price for all. Because of the lapse in appropriations, FDA is only conducting routine domestic or international inspections of food facilities. Excepted FDA inspectors are prioritizing their work based on public health need and are being deployed to respond to recalls, outbreaks or other situations requiring immediate attention.

The government closure is also beginning to weigh on one of the most important partsof the U.S. economy — the housing market. Housing lenders rely on a variety of government data, such as verification of borrowers’ income, which are unavailable with the partial closure of the Internal Revenue Service and other agencies. Although the mortgage industry has found some creative ways to work around the shutdown, sometimes they’re simply taking the risk of making loans without information. The shutdown is delaying loan approvals, which impacts the closings for homes bought traditionally or at auction. Without loan approval, many auction buyers are unable to purchase.

Of all the suspended activities the cessation of equipment certification seems likely to affect the technology, media, and telecoms sectors most immediately. In the United States, virtually all electronic devices must receive FCC equipment certification prior to sale (cell phones, televisions, computers…). All told, the FCC and its third-party contractors process an estimated 16,000 equipment certification applications annually. But with further processing impossible during the shutdown, electronic devices not already approved by the FCC cannot lawfully be sold in the United States.

If the shutdown persists, the FCC seems likely to postpone critical near-term spectrum auctions. Wireless devices need spectrum to operate, and the industry has long sought more spectrum to limit dropped calls, increase data speeds, and improve wireless coverage. Prior to the shutdown, the FCC scheduled its first wireless broadband spectrum auction in five years for January 2014 and had planned for two other major auctions for later that year. Following the shutdown, these auctions — and the tens of billions of potential revenues for the U.S. Treasury they were expected to generate — seem likely to be delayed unless the engineers, economists, lawyers, and staff that process new spectrum allocations and license assignments resume work in the near future.