The news: The US government shutdown has entered its fourth week with no resolution in sight, making it the second-longest funding lapse in modern history behind only the 35-day shutdown of late 2018 and early 2019.

Zooming in: While government shutdowns usually have limited impact on retail and the broader economy, this one is proving to be the exception—a possibility we flagged before it began last month.

• The travel industry has already lost nearly $3 billion, according to the US Travel Association, as air and rail disruptions, museum closures, and limited access to national parks weigh on demand. The fallout is spreading as travelers cancel or skip trips, squeezing hotels, restaurants, and retailers in turn.
• Individual companies are adjusting to a government operating below full capacity. Unilever, for example, postponed the spinoff of The Magnum Ice Cream Company, originally set for November 10, because the SEC cannot process approval for the company’s NYSE listing during the shutdown.
• Grocers are bracing for SNAP benefits to stop on November 1. That would be a blow to Walmart, which captures 25.8% of SNAP recipients’ grocery spending, and Kroger, with an 8.6% share, per Numerator.

Zooming out: Oxford Economics estimates the shutdown will reduce annual economic growth by 0.1 to 0.2 percentage points for each week it continues. In the unlikely event it lasts the entire fourth quarter, it could trim 1.2 to 2.4 percentage points from real GDP growth.

• Even short of that worst-case scenario, roughly 1.5 million federal employees—either on furlough or classified as “excepted”—will miss their first full paycheck this Friday.
• That will likely lead many to cut back on spending, even though the Government Employee Fair Treatment Act of 2019, signed by President Donald Trump during his first term, ensures back pay once the shutdown ends. Government contractors, however, have no such guarantee.

Our take: The timing of the government shutdown couldn’t be worse. Even before it began, nearly every holiday forecast—including our own—expected slower retail sales growth as tariffs, a cooling labor market, shaky consumer confidence, and elevated interest rates weigh on consumers already navigating a cost-of-living crisis. The shutdown adds a storm cloud over an already gray holiday outlook.