Washington—President Obama today took Congress to task over its 11th hour resolution of the government shutdown and lifting the debt ceiling, issues that could have spun the United States into default and wrecked havoc with the international economy.
“Probably nothing has done more damage to America’s credibility in the world, our standing with other countries, than the spectacle that we’ve seen these past several weeks,” Obama said. “It’s encouraged our enemies, it’s emboldened our competitors, and it’s depressed our friends, who look to us for steady leadership.”
Not to mention possible hampered consumer spending on the eve of the all-important holiday shopping season.
“We don’t know yet the full scope of the damage, but every analyst believe it slowed our growth,” the president said of the shutdown, adding that consumer confidence, new home buying and hiring have slowed as a result.
‘Crisis to Crisis No Way to Govern’
Obama wasn’t the only leader to take Congress to task. The National Retail Federation (NRF), the U.S. Chamber of Commerce and other business groups also criticized the gridlock and turmoil as hurtful to the U.S. economy.
“As we head into the holiday shopping season, retailers and consumers need stability and certainty from policymakers in Washington and assurance that the economy will not implode due to their actions or more important, lack thereof,” said Matthew Shay, NRF president/ceo. “This new norm of legislating from crisis to crisis is no way to govern. Our economic recovery is retail-led and consumer-driven, and political leaders on both ends of Pennsylvania Avenue need to stop undermining consumer confidence with partisan posturing. When consumers cut back their spending, it threatens jobs in every industry. If it’s bad for retail, it’s bad for the economy, and ultimately the biggest losers are American taxpayers.”
The NRF reported Wednesday in its holiday consumer survey that 29% of respondents called “the situation would somewhat or very likely affect their spending plans.”
In a survey by Goldman Sachs commissioned for the International Council of Shopping Centers (ICSC), which interviewed 1,025 adults between Oct. 10 to 13, 40% of consumers reportedly have curbed their spending as a result of the partial U.S. government shutdown.
“It is clear that the fallout of the past two-week impasse in Congress has affected consumers’ willingness and maybe their ability to spend,” said Michael Niemira, ICSC’s vice president of research.
More ominously, Standard & Poor’s researchers stated in a report, “If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks. That points to another humbug holiday season.”
‘Epicenter of Stupidity’
The last-minute bipartisan deal offers a temporary fix and no permanent solution to the issues dividing the Republicans and Democrats. Under the provision, the government will reopen and have funds to operate through Jan. 15, 2014, and the debt ceiling is raised until Feb. 7. That means further budget battles, even another government shuts could come again early next year.
Speaking to analysts today at an investors meeting, Leslie Wexner, chairman of L Brands, which owns Victoria’s Secret, said, “I think the consumer is just nervous for obvious reasons. I think we all are….There’s financial instability that exists in the world….We as a country were kind of a bastion of stability; now we’re the epicenter of stupidity.”
Wexner added, however, that his company’s brands are well positioned for the holiday season. “We have a very good business, considering all the static. We are in a very sound position. It’ll be a merry Christmas.”
While the vote Wednesday provided Congress with some breathing room to negotiate, Shay added, “It is not a solution to our long-term economic or fiscal challenges.”