Gridlock could affect shopping

Uncertainty may dampen holiday buying enthusiasm

NEWYORK— Will Washington be the Grinch who stole Christmas?

After weeks of bickering between Congress and the White House, President Barack Obama early Thursday signed into law a plan that ended a 16-day partial government shutdown and suspended the nation’s debt limit until early next year.

But the measure, which came a couple weeks ahead of the holiday shopping season, only temporarily averts a potential default on U.S. debt that could send the nation into a recession.

Retailers hope that shortterm uncertainty won’t stop Americans from spending during the busiest shopping period of the year.

Indeed, retailers and industry watchers say Washington gridlock already has caused some shoppers to hold back on purchases.

Men’s clothier Jos. A. Bank Clothiers and furniture chain Ethan Allen noted that their customers cut back in recent weeks. And auto sales, which had been strong, trailed off last week, with experts blaming Washington lawmakers.

Retailers say the agree-

ment that lawmakers approved, which funds the government until Jan. 15 and gives the Treasury the ability to borrow above its limit until Feb. 7, may not be enough to alleviate shoppers’ concerns.

Robert N. Wildrick, chairman of Jos. A. Bank Clothiers, which has 623 stores nationwide, said retailers can’t afford more uncertainty during the holiday shopping season, which is six days shorter than 2012.

Before the stalemate in Washington, retailers had reasons to be cautiously optimistic about the holiday season, which accounts for up to 40 percent of retailers’ annual revenue. While the job and housing markets are improving, that hasn’t yet translated into sustained spending increases among shoppers.

But retailers spend money on advertising, order additional inventory and add sales staff during the holiday season in hopes that shoppers will spend freely.

If shoppers don’t, stores may have to discount heavily, which eats away profits.

The National Retail Federation, the nation’s largest retail group, had forecast in early October that sales would climb 3.9 percent in November and December to $602.12 billion, higher than last year’s 3.5 percent gain. But the forecast didn’t account for the prolonged shutdown.

Jack Kleinhenz, chief economist for the Washington, D.C.based group, told The Associated Press that he may lower the projection after he sifts through retail sales and jobs data, reports that had been delayed because of the shutdown. The uncertainty could hurt sales, he said.

“It’s like having an ongoing fever that you would like to shake but just doesn’t go away,” Kleinhenz said. “That causes a backup in decision-making from consumers and businesses.”