Add another potential casualty of Washington’s gridlock: the holiday shopping season.
The congressional stalemate that brought about a partial government shutdown has rattled Americans already spooked by years of economic weakness. And the uncertainty could stretch into 2014, with debate continuing over the federal budget and debt limit.
The shaky consumer confidence is pummeling sales forecasts for the holiday season, a crucial period that can account for up to 40 percent of a retailer’s annual revenue.
The National Retail Federation, the industry’s top trade group, said Wednesday that shoppers this year planned to reduce spending on presents and holiday preparations.
More than half of consumers surveyed blame the economy for denting their holiday budgets. And nearly 3 in 10 fault the political bickering on Capitol Hill for cutting into their merrymaking plans.
The average consumer will spend $737.95 on gifts, decor and greeting cards, 2 percent less than the $752.24 shelled out last year. Of more than 6,000 survey respondents, nearly 80 percent said they intended to spend less overall during the season.
The value of gifts for family members is projected to slide 2 percent from last year. Earlier this month, the federation had projected that holiday sales would hit $602.1 billion.
Also Wednesday, the Standard & Poor’s credit rating agency sketched a bleak picture in a report.
“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,” Standard & Poor’s researchers wrote. “That points to another humbug holiday season.”
Retail sales were lagging far before the government shutdown.
In September, during the prime back-to-school season, sales at stores open at least a year grew modestly but missed Wall Street’s expectations. Analysts blamed volatile weather, middling wage growth and uninspiring fashions on top of the looming threats of closing government agencies and defaulting on the national debt.
Retail growth has been weak all year. Many stores spent last month trying to purge aisles of piles of stock from the summer.
The slow performance isn’t surprising, considering the backdrop of the national economy, which expanded at a “modest to moderate pace” in September and early October, according to the Federal Reserve’s beige book report Wednesday.
The report, so named for the color of its cover, showed that employment growth remained muted, with many businesses “cautious to expand payrolls, citing uncertainty surrounding the implementation of the Affordable Care Act and fiscal policy more generally.”
Consumers boosted spending on technology and big-ticket items such as autos and home goods, driven by pent-up demand and attractive financing deals. But overall, retail sales “were a bit soft,” according to the report.