Confidence concerns linger in wake of impasse
October 17, 2013
New York--While the shutdown is officially over and the government has, at least temporarily, agreed on financing going forward, the effect of the fiscal fight on consumer confidence didn’t dissipate with Congress’ near-midnight vote.
Jewelers, like many other retailers, are concerned that this latest government loggerhead, coming only a little more than two months before the all-important holiday season, will impact consumers’ mindset about spending money.
Two retailers with stores in the Washington area, ground zero for the 16-day federal furlough, said their clients weren’t directly impacted by the shutdown, which began Oct. 1 and ended Thursday.
But retailer Jim Rosenheim, owner of Tiny Jewel Box in Washington, said customers missing a few paychecks is not the issue. The issue is the psychological impact on consumers; incidences like this latest government meltdown can make them frustrated and nervous.
That is not good for business, especially 68 days before Christmas.
Rosenheim, however, stops short of labeling himself a nervous business owner. “I wouldn’t say nervous. I would say a little uneasy. I can’t believe our elected officials would actually jeopardize the economy in this country and elsewhere, playing these political games,” he says. “To play winner-gets-all with the economy, (with) everybody’s situation possibly affected by this, this is not what we elected these people to do.
“It’s scary that for political reasons people would take us up to the edge.”
Although his store is geographically far removed from Washington, Bill Longnecker, who owns Longnecker Jewelers in McCook, Neb., expressed concerns similar to those voiced by Rosenheim.
He says the clientele in his extremely politically conservative area have grave concerns about the national debt and what they perceive as out-of-control government spending. It makes them hesitant to spend because they are unsure about the country’s long-term future.
“People are really reserved about going into debt on their credit cards,” Longnecker says. “You can hear it. There’s nervousness. You can tell they are really holding back because of how they feel about the future.”
Jim DeNatale, of DeNatale Jewelers in New York, also has a “strong fear” the government’s problems will cause consumers to spend less this holiday season. “They’ve already caused doubt in people’s minds (as to whether) they know what they are doing or that the country’s going to run smoothly in the future,” he says.
Retailers’ concerns over decreased consumer confidence in the wake of the federal shutdown and debt limit debate seem warranted.
The Gallup poll for the week of Oct. 8 showed the steepest drop in Americans’ confidence in the economy since the collapse of Lehman Brothers in September 2008, with Gallup noting that “fiscal brinkmanship in Washington” has played a role in many of the big week-to-week drops in Americans’ economic confidence since 2008.
The following week’s poll showed continuing erosion in consumers’ view of the U.S. economy, with the Gallup Economic Confidence Index dropping five points week-to-week following a 12-point slide the prior week.
Still, there are some jewelers who say consumers are immune to the government’s squabbling at this point--the country, after all, made it through a similar debt-ceiling debate just two summers ago--don’t feel it really impacts their daily lives or, simply, won’t be giving this October faceoff much of a thought by the time the holiday shopping season is in full swing.
“People have a short attention span,” says Jonathan Mervis of Mervis Diamond Importers, a Washington-area retailer. “Hopefully, they won’t care about this by mid-November and December.”
He says overall his clientele, including those who are federal government employees, weren’t too adversely affected by the shutdown. They are generally in good-paying jobs, conservative with their money and don’t live paycheck-to-paycheck so missing a few paydays was not devastating for them.
He also says that the fact that we’ve been here before plays a factor in consumers not totally losing their desire to shop.
“People are more resilient post-recession,” Mervis says. “They realize they are going to survive and that the sky didn’t fall.
“I think people will be OK.”
Jeweler Kelly Newton agrees that some, not all, of his customers do have some degree of immunity to the political quagmire that continues to dominate the headlines, and notes that his business has not been at all impacted by the impasse. He said his store Newton’s Jewelers, located in Fort Smith, Ark., has only gotten busier over the past few weeks.
“A lot of our customers are sick and tired of hearing it. It’s just business as usual. They think that’s all that happens in Washington anymore so they are not surprised. They are getting kind of used to all the battles,” he says.
That being said, Newton still thinks it is conceivable that the problems will shake consumer confidence for the season, so much so that he’s mentally preparing himself for a Christmas that could be slower than expected.
“Mentally, I am ready for it to fall off,” he says. “I am just preparing myself in case it does.”