Has the Government Shutdown Ruined Christmas?

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Consumers shoppingThe government shutdown was a pain while it was still happening, but unfortunately for businesses, the effects of the temporary federal furloughs are still being felt. According to a press release, the Internal Revenue Service will be slow in starting the tax filing season, not starting until one or two weeks past the expected date — no later than February 4, but no sooner than January 28.

“About 90 percent of IRS operations were closed during the shutdown, with some major workstreams closed entirely during this period, putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season,” read the IRS release.

According to NBC News, a late release of consumer refunds in 2013 had resulted in poor holiday sales — bad news for retailers and economic growth alike. “You always hear [sales] just get pushed out, but it doesn’t happen. The lower or middle-income family just realizes they don’t need to purchase that extra shirt from Macy’s and instead decides to save it if something goes wrong. The consumer emotionally and physically closes up,” said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors.

According to some analysts though, the delay doesn’t entirely rule out expenditure and revenue for retailers, and may just change the timing. “What we’re talking about here is a shift in the timing of spending rather than the amount. You might get more spending in late February rather than early February,” said Paul Dales, senior U.S. economist with Capital Economics.

Dale points out that this could hurt some families that can afford to shop without holiday help — “If there are discounts available on just that day and you miss it, you might not buy anything,” said Dale, a point seconded by Sozzi. “Retailers might have to discount in December just to get people engaged in the stores so they don’t enter January with too much inventory,” he said.

A J.P. Morgan analyst, Matthew Boss said that post-holiday spending would probably be hurt. “If it’s not the key week of Christmas or back to school, the consumer basically shuts off,” Boss said.

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