According to CNBC, Affirm CEO Max Levchin revealed that furloughed federal employees are showing a “very subtle loss of interest in shopping” during the ongoing government shutdown. The shutdown, which began October 1st, has become the longest in U.S. history and affects at least 670,000 furloughed workers plus another 730,000 employees working without pay. Levchin noted the trend represents just “a couple of basis points” in impact so far but confirms he’s closely monitoring employment data for signs of major disruptions. The economic impact extends beyond government workers to programs like SNAP food benefits serving 42 million Americans. Despite the early warning signs, Levchin maintains that “right now, things are just fine” and his company can adjust credit standards if needed.
The Domino Effect Begins
Here’s the thing about economic downturns – they rarely announce themselves with fireworks. They start exactly like this: a “couple of basis points” here, a “subtle loss of interest” there. And when you’re talking about 1.4 million federal workers suddenly uncertain about their next paycheck, that subtlety can become a tsunami pretty quickly.
What Levchin’s really saying between the lines is that Affirm’s algorithms are picking up behavioral changes before they show up in traditional economic data. People don’t just stop shopping overnight – they get more selective, they delay purchases, they think twice about that financing offer. And when you’ve built your business on people saying “yes” to buying things, even small shifts in consumer psychology matter.
The Credit Tightening Question
So when does “capable of adjusting credit standards” become “actively tightening lending”? That’s the billion-dollar question. Affirm and other fintech lenders have been riding a wave of consumer confidence and steady employment. But federal workers represent exactly the kind of stable, reliable borrowers these companies love.
If even government jobs aren’t safe, what does that say about the broader economy? And we’re not just talking about missed paychecks – the shutdown has frozen everything from small business loans to mortgage approvals. The ripple effects could extend far beyond what we’re seeing in shopping cart abandonment rates.
Basically, when the people who process your tax returns and approve your business permits aren’t getting paid, the entire economic machine starts grinding slower. Levchin’s “everything’s fine” reassurance feels a bit like someone noticing the engine light come on but deciding to keep driving because the car hasn’t actually broken down yet.
Beyond the Numbers
Let’s not forget what these “basis points” actually represent. We’re talking about real people making hard choices between groceries and holiday shopping, between paying bills and buying gifts. The SNAP program serving 42 million Americans getting cut off? That’s not an economic indicator – that’s hunger.
The scary part is we don’t know how long this lasts. Previous shutdowns measured in days or weeks created temporary inconveniences. This one’s already historic, and every additional day pushes more families toward financial breaking points. Affirm might see a “subtle” change now, but wait until credit card bills come due and savings accounts run dry.
I’ve been covering tech and finance long enough to recognize corporate reassurance language. “We’re monitoring the situation” and “capable of adjusting” are what executives say right before they announce layoffs or credit freezes. Let’s hope this shutdown ends before we find out what the next phase of this economic domino effect looks like.
