Shutdown leads to holiday worries
Sorry Dr. Seuss, it looks like Americans will be reading a different version of your yuletide classic this year: "How the Government Shutdown Stole Christmas."
Even before the shutdown began, there was a lot of uncertainty about whether this holiday shopping season would be better or worse than the last.
Anyone who's been out shopping lately knows retailers are worried, too.
Nothing says "low expectations" quite like the sight of Walmart, Macy's or even Drug Emporium hauling out their Christmas trees, wrapping paper and holiday gift items during the first two weeks of October. (Or as some on my Twitter feed call it, "Pumpkin Spice Latte season.")
So, needless to say, this was probably not the best time to go shutting down the government, laying off hundreds of thousands of workers and pushing the global finance system to the edge of Mount Crumpit.
But don't take my word for it.
"The government shutdown and flirtation with default have dealt a severe and entirely avoidable blow to America's reputation around the world while harming economic growth and job creation," Business Roundtable president John Engler said last week.
Standard and Poor's said last week that, once all the secondary ripple effects are considered, the shutdown likely took about $24 billion out of the economy and pushed consumer confidence to abysmal lows.
"The bottom line is the government shutdown has hurt the U.S. economy," S&P said.
And the economy will go on hurting, S&P said, due to the short-term nature of the deal struck last week.
Since Congress now has just three months to find a long-term budget compromise, and since consumers - particularly those furloughed government workers - have little faith in their elected officials these days, consumers this shopping season will probably feel more like the Ebenezer Scrooge at the beginning of "A Christmas Carol" than the one at the end.
"If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they'll remain afraid to open up their checkbooks," S&P said. "That points to another Humbug holiday season."
The National Retail Federation concurs.
Its annual consumer survey, released last week, found the average holiday shopper plans to spend $737.95 on gifts this year, 2 percent less than last year. The survey also said 29 percent of shoppers said Washington's fiscal issues would affect their shopping plans.
"Though the foundation for solid holiday season growth exists, Americans are questioning the stability of our economy, our government and their own finances," said Matthew Shay, president of the retail federation.
"Americans deserve to feel good about spending their hard-earned money on gifts for others, and this holiday season it's evident some could second-guess their spending."
Shay said it is likely consumers will continue to be tight with cash.
With that in mind, it might behoove Congress to work up a bargain before St. Nick boards his ramshackle sleigh.
I bet all of our hearts (and cash registers) would grow three sizes that day.