Janet Yellen warns that the government shutdown will make people less willing to shop

  • Janet Yellen, former chair of the Federal Reserve, said in a panel discussion on Monday that if the government shutdown continues, it could impact consumer sentiment and thus the retail sector.
  • US consumer confidence remained strong throughout 2018 but dipped in December.

It’s day 24 of the government shutdown and nearly 800,000 federal workers are still without pay, lines are mounting at airports, and trash is piling up at national parks. Now experts say retail stores could be hit next.

Read more: From airport lines to food inspections, here are all the ways the government shutdown is impacting the lives of average Americans

In a panel discussion at the National Retail Federation’s annual Big Show in New York on Monday, Janet Yellen, former chair of the Federal Reserve, said that if the shutdown continues it “could impact consumer psychology and consumer sentiment.”

While consumer sentiment has remained strong for the past year, it dipped in December, dropping to the lowest level in two years. Yellen pointed out that this was due to consumer expectations for the future, questions about the government remaining shut down, and the possibility of a market downturn.

“Almost all economists are forecasting a slowdown in 2019,” she said.

Last week, retail stocks took a battering after several stores reported weaker-than-expected sales numbers for the holiday season.

Macy’s stock dropped by as much as 18% on Friday on the release of its holiday sales data. It lowered its sales growth and profit forecasts for the year.