Summary Consumers are limiting their spending due to federal government shutdown.
WASHINGTON (AFP) - US consumers, the engine of the world s biggest economy, are holding back spending as the Washington budget dispute keeps the federal government shut down, according to a survey released Tuesday.
Two out of five consumers said they were limiting their spending "as a result of the direct or indirect effects" of the partial federal government shutdown that began October 1, said the International Council of Shopping Centers and Wall Street bank Goldman Sachs.
Of those who were curbing spending, the majority said the scaleback was "a little" while the remainder indicated it was "considerable".
The weaker spending casts a cloud over retailers as they gear up for the crucial year-end holiday shopping season that accounts for a significant part of their earnings.
ICSC data showed slower spending by customers in retail chains around the country over the first 12 days of this month.
"As congressional leaders optimistically predict a budget deal may soon be reached, it is clear that the fallout of the past two-week impasse in Congress has affected consumers willingness and maybe their ability to spend," Michael Niemira, the ICSC s chief economist and vice president of research, said in a statement.
"Hopefully, if the end of the government shutdown truly is in sight, this is likely to restore consumer confidence quickly and well ahead of the holiday season," he said.
The survey results reflected the uncertainty created by the shutdown and the stalemate between the White House and Republicans over funding for the current fiscal year and raising the nation s debt ceiling.
The failure of Congress to pass a budget for the year that began October 1 forced the shutdown of nonessential government services, sending hundreds of thousands of civil servants home without pay.
Also held up by the dispute is an increase of the country s $16.7 trillion borrowing limit. If it is not raised by Thursday, the US Treasury has warned the government will begin to run out of cash and could default on its obligations.
The survey was conducted between October 10 and 13 as the shutdown dragged through a second week.
A demographically representative sample of 1,000 adults was asked online: "Given the federal government shutdown, has this fiscal policy impasse in Congress caused you to scale back or eliminate spending?"
The answers showed the lower-income consumers were affected more than those in the upper-income bracket. But both groups were tightening their grip on their wallets.
Forty-seven percent of consumers with incomes of $35,000 or less were more likely to be scaling back spending, compared with 32 percent of those earning $100,000 or more.
The ICSC also reported a broad slowdown in US retail chain-store sales last week, the second week in a row of declining sales.
Sales, excluding restaurant and vehicle sales, fell by 0.7 percent in the week ending October 12, following a 0.1 percent dip in the prior week.
"Sales weakened across the board by store segment -- partially a result of the drag from the government shutdown," Niemira said.
The year-over-year gain slowed again, to 1.0 percent. In the last week of September, the year-over-year gain was 2.1 percent.
The government s September report on US retail sales, a closely watched benchmark of economic health that was scheduled last Friday, was suspended due to the government shutdown. In August, retail sales rose just 0.2 percent, half the rise expected by analysts.
