Add one more casualty of Washington's dysfunction: what you buy your loved ones this holiday season.
According to the National Retail Federation, 2013's holiday shopping season will show only moderate growth for retailers. The trade association predicted Thursday that this year holiday shoppers will spend $602 billion in November and December, up 3.9 percent from 2012. That's a slight acceleration from 2012's rate of 3.5 percent and is also an improvement over the 10-year average growth rate of 3.3 percent, but the last 10 years also includes the doldrums of the Great Recession.
Speaking to reporters Thursday, NRF President and CEO Matthew Shay called this "solid growth," especially in light of the many headwinds facing the economy. Shay pointed to constant uncertainty coming from Washington, which came to a head Tuesday at midnight, in the form of a partial government shutdown.
"In spite of the fundamentals, which really ought to suggest a much healthier pace of growth, we're being held back for a number of reasons, and that's not primarily even related to what's going on this week in particular, it's been going on for some time," he said. "The things going on this week with the shutdown just really are exacerbating that."
A continued shutdown, as well as inching closer to the debt ceiling deadline, could significantly dent consumer confidence, if the last near-default is any indication. According to a Treasury Department report released Thursday, consumer confidence fell by 22 percent in the weeks surrounding the summer 2011 debt ceiling showdown. A decline in consumer confidence can mean a significant hit to retail sales.
It's not just Washington that is potentially denting holiday sales; broader, lackluster economic growth is also a drag.
"Since spring the economy has continued to expand, even though it's been at an unspectacular pace," said NRF economist Jack Kleinhenz.
The holiday season is of massive importance to many retailers, accounting for 20 to 40 percent of a business' annual sales, according to the federation.
If the NRF is right in its calculations, it could mean that retail sales will have finally recovered from their post-recession trough. Though nominal figures show that holiday sales have been slowly improving year by year, when adjusted for inflation, the holiday spending recovery has been slow.
Then again, it's possible that estimates are off. Last year, the NRF foresaw holiday sales growth of 4.1 percent. Actual growth was 3.5 percent.