The defense contractors will likely be the most affected sector if the U.S. government shuts down, according to Paul Hickey, co-founder of Bespoke Investment Group.
However, he sees a shutdown's impact as mild:
“These companies are very reliant on the federal government for their revenues, but I don’t think a government shutdown is such a terrible thing for these companies,” Hickey told CNBC.
The duration of a shutdown "will be a few days," he said. "We’re in the beginning of a quarter, so these contracts take place over time—they’re not just one-shot deals, so there are plenty of time for the negotiations to pick up and get these pending deals done before the end of the deal.”
Instead, the real danger might lie further in the future:
“More worrisome is the inevitable budget cuts that will be coming down the road,” Hickey said.
The White House and the U.S. Congress have until Friday to reach agreementon an elusive federal spending-cut bill—or face a partial shutdown of the U.S. government.
Companies with Government Contracts:
Scorecard—What He Said:
- Hickey's Previous Appearance on CNBC (Mar. 28, 2011)
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CNBC Data Pages:
No immediate information was available for Hickey or his firm.