Though the federal government shutdown ended last week, the economic impact is likely to be felt in Maryland for months, dimming prospects for a robust holiday shopping season.
With Congress funding the government only through Jan. 15 — raising the specter of another shutdown — some federal workers in Maryland plan to limit their holiday spending. Stores are bracing for more frugal customers. And financial experts are urging federal workers to start saving immediately.
"To move the economy forward, we need a strong consumer. If a consumer can't rely on his or her job … they aren't going to spend," said Bradley Turner, an associate economist at Moody's Analytics. "It's going to be a pretty weak holiday season."
Joyce Dunlap and her husband, one of the essential federal employees who worked without pay while most government agencies closed, are already gearing up for another shutdown.
"We are going to have Christmas dinner, but we're giving out IOUs for Christmas gifts," said Dunlap, 60. Each IOU will disclose the gift to be received "if the government gets its act together by Jan. 15."
The Baltimore County resident added, "As far as the economy, we are not contributing to it for Christmas."
Economists predict that many consumers will follow the Dunlaps' lead, holding back on holiday spending while waiting to see whether lawmakers will work together or throw the country into a crisis once more. With holiday sales on average accounting for nearly 20 percent of retailers' annual sales, such thriftiness could have a big impact on merchants in Maryland, where more than 300,000 federal workers live.
"If you are a government employee and know that in the middle of January there is a good chance that you may be out of a job, you probably will save as much as you can," said Daraius Irani, executive director of the Regional Economic Studies Institute at Towson University. "I suspect the holiday sales will be a bit soft here in the region because of that looming threat."
The 16-day shutdown has already taken a toll, with Standard & Poor's estimating that it took $24 billion out of the U.S. economy.
Maryland will likely see slightly lower growth at the end of the year because of the shutdown, said Richard Clinch, a locally based research economist at Battelle Memorial Institute.
"Some of it will come back. People who didn't pay the mortgage will get their back pay and pay their mortgage," he said.
But Clinch and other economists note that many Marylanders don't work directly for the government and won't be able to make up lost income. That includes those employed by government contractors, vendors, hotels, dry cleaners and restaurants catering to agencies like National Institutes of Health in Bethesda and the Food and Drug Administration in Silver Spring.
As Irani noted, "People didn't go to lunch for 16 days."
The compromise struck by lawmakers last week is unlikely to boost the economy or inspire confidence among consumers, economists said.
"It's a short-term nonsolution to the bitter divide in Congress," Turner said.
Rudy D'Alessandro, 50, is a National Park Service employee who has lived through two shutdowns. Last week's deal means "Christmas gifts will be much smaller, a trip out of town for the weekend doesn't happen," he said.
The Rockville resident, who is also a chapter president with the National Treasury Employees Union, will receive his next paycheck Oct. 29. "There is no word when we will get back pay," said D'Alessandro, who has an unemployed wife and a son in college.
The uncertainty is also prompting Gerald Davis to scale back holiday plans.
Davis, a quality assurance evaluator at Fort Meade who is also married to a federal employee, said his family will be staying in Maryland this winter, rather than making their usual trip to visit relatives in Chicago.
"We already put it out there that we will not be having a whole lot of gifts," said Davis, 58, of Bowie. Friends and relatives who work for Uncle Sam have been sending out similar warnings of holiday austerity, he said.