Government Uncertainty Hurting Consumer Confidence

October 17, 2013


Jake’s Toy Box in Arvada is busy stocking toys on the shelves to prepare for the holiday shopping season. 

The family-owned toy store has the certainty of knowing the holiday season is coming, but like many merchants, they are facing the uncertainty of not knowing how much shoppers are going to be willing to spend this year.

While Congress reached an agreement to reopen the federal government and avoid a default, it is only a temporary solution.

“The government is funded until January 15, and the debt limit will not have a problem until February. So it will be déjà vu all over again,” economist Jack Strauss says. “Businesses want certainty and the government has shown that it can’t give that certainty.”

The cloud of uncertainty created by another potential government shutdown and default is likely to cast doubt for consumers.

“Consumer confidence will probably remain low. In August, it hit a 31 year low and because of fiscal uncertainty; it is unlikely to rebound. This implies relatively slow consumer spending over the holiday season,” Strauss says.