The Government Shutdown’s Impact on Retail

Posted on February 26, 2019

Online and brick-and-mortar holiday retail sales fell 1.2 percent short of expectations in December after experiencing more than 5 percent year-over-year growth in October and November. Despite this dismal data, 2018 holiday sales actual grew 2.9 percent over the same period in 2017. What happened to hamper holiday sales?

Following on the heels of an interest rate hike on Dec. 19, 2018, the public equity markets were roiled by a government shutdown that has broken records as the longest in the nation’s history. Uncertainty over when the government would reopen and what lingering effect it would have on consumers combined with an already tenuous trade relations with China spooked consumer sentiment and put the squeeze on consumer spending.

According to the National Retail Foundation, the reopening of the government, a strong job market, wage growth and solid fundamentals will continue to fuel retail sales in 2019, which are expected to increase between 3.8 percent and 4.4 percent.

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