Shutdowns to Delay Tax Refunds, Agentic Commerce, Supply Chains, Consumer Confidence

Welcome to the Paychex Thrive Week in Review podcast, the show that breaks down the most interesting headlines in the news of the past week. I'm Rob Parsons, sitting in for Gene Marks. Let's dive right into what's on the docket.

First of all, the government shutdown. Partial or not, this might already be resolved by this airing. Every shutdown has short-term and sometimes long-term impacts. A readiness memo from the Treasury Inspector General demonstrates this, drawing attention that the 2026 filing season for taxes might be particularly rocky for the IRS.

A recent memo reveals the IRS is facing a staffing hangover following a wave of workforce reductions brought on by the mass layoffs during the 43-day shutdown in 2025. It has pushed IRS staffing back to 2021 levels, but the agency faces a backlog of work that is 129% higher than pre-pandemic levels.

So, there's some red flags here. There's a backlog of over 2 million items that are currently sitting in the inventory, including a massive spike in paper returns and correspondence. There's a service drop. The IRS has lowered its telephone level of service goal from 85% down to 70%. And then there's delays in modernization; Projects like Taxpayer 360, which was an AI-enabled tool for agents, facing bugs and delays due to government shutdowns.

So, here's your quick takeaways. The zero-paper initiative is underway, but only at about 4% completion for individual returns. You should expect longer wait times for refunds and correspondence in 2026.

Obviously, individual tax filers waiting for returns impact businesses in different ways, but employers will be left picking up the pieces. Delays in expected refunds could impact employee production, morale, and even increased stress if those refunds were targeted toward debt or necessary spending and budgeting.

So, quick side note, managing your team doesn't have to be complicated. From hiring the right people to getting them onboarded and keeping things running smoothly, Paychex has the HR tools and support you need to do it all. It's like having an extra set of hands when you really need it. Curious? Visit paychex.com slash meetpaychex. That's paychex.com forward slash M-E-E-T-P-A-Y-C-H-E-X. You can also find the link in the show notes.

So, let's get back to news bit number two: the rise and the lag of bot payments. Let's talk about shopping here. We've been hearing about agentic commerce for a while. The idea that an AI agent doesn't just suggest a product, it goes out and buys it for you.

According to a recent analysis from Payments Dive, we are hitting a weird bottleneck. While AI can find the best deal, the actual payment rails aren't ready for bots. Most checkout systems are designed for humans with thumbs and CVV codes, not autonomous software. There are key challenges, including authentication friction because bots often get blocked by the I am not a robot captchas. Ironic, isn't it?

Then there are security concerns such as how does one authorize a bot to spend $500 without manual approval for every transaction? And finally, there's merchant readiness, which focuses on retailers who are currently optimized for human browsing and not headless bot API calls.

So, here's your quick takeaways. Agentic Commerce is moving from search to action, but the payment infrastructure is the missing link. Businesses need to develop machine readable checkout lanes to capture bot lead revenue.

Now, let's get to news bit number three, scarcity redefines the supply chain. Moving from how we buy to what is actually available is really the challenge here. Supply Chain Dive recently dropped a report on the 2026 supply chain playbook, and the keyword is scarcity. The era of just-in-time abundance is officially over.

After enduring a year of uneven tariff policy, businesses now need to restructure their approach to shore up the reliability of their supply chains and reduce risk of shortages. They're doing this by focusing on inventory. Some of the items expected to be scarce in 2026 are:

• Medical supplies, with experts expecting a 2.58 % increase in inflation
• Memory chips that impact the auto industry, as prices are expected to rise 70%, and
• Cattle, which is the nation's beef supply.

So, the new strategy includes resource hoarding, where companies are moving toward just-in-case inventory for critical minerals and components. They're using circular logic, which has increased focus on recycling and mining old products to gain items, such as refined copper, and to bypass volatile global trade routes, as well as vertical integration. This is where firms are buying their suppliers outright to guarantee they stay at the front of the line.

So, here are your quick takeaways. Reliability is now more valuable than low cost. The 2026 winners will be those who control their source materials, not just their logistics.

And finally, here's news bet number four; Consumer confidence hits a low. Our final tidbit comes from the Conference Board. It released the Consumer Confidence Index, showing it declined by 9.7 points to 84.5 this month. That's the lowest it's been since May of 2014.

Consumers have also indicated an increasing concern about their financial well-being. All five components of the composite index declined, including the Present Situation Index, which dropped 9.9 points. This index measures views on current business conditions and labor market conditions. Also, the Expectations Index declined 9.5 points. This index measures short-term outlook on income and labor conditions.

So, that's the Week in Review. To recap, recent shutdowns are impacting the IRS and are expected to delay refunds. Agentic Commerce has some issues to resolve. Supply chains must be redesigned, and consumer confidence is sinking.

Thanks for listening to Week in Review. This has been a great Paychex podcast. I'm Rob Parsons, and please join us next week for more news and more insights.

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR payroll benefits or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/worx. That's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive.

I'm your host, Gene Marks, and thanks for joining us.

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