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Shutdown:

By the Numbers 549: The number of NASA’s 18,250 employees cleared to Though you may not have felt its impact directly, the partial continue their work during the shutdown. This put NASA’s shutdown of the U.S. government was the big news of furlough rate at a whopping 97 percent. October. The shutdown put thousands of government workers 6,620: The number of FDA workers and inspectors on furlough and closed certain services that affect millions of furloughed, according to the Department of Health and Americans. By the time Congress reached an agreement and Human Services. The FDA furlough greatly reduced the passed a budget, a dizzying amount of data had been number of tests on food, drugs and cosmetics, increasing the published about the shutdown’s effects. risk that contaminated food would make it to the market. To help simplify what happened, here are some of the most 68 percent: The percentage of workers furloughed at the interesting numbers seen during the shutdown. Center for Disease Control (CDC). Like the FDA, one of the CDC’s functions is preventing potentially deadly illnesses, 16: The number of days the shutdown lasted. The including screening individuals with foreign pathogens at shutdown stretched from October 1, the first day of the airports. government’s fiscal year, to October 16. The last time the government shutdown was for a 21-day stint in 1995-96. $16.7T: The national debt limit set in May 2013. The government would have exceeded the limit on October 17, $3.03T/$3.77T: The revenue and expenditures that make but Congress agreed to suspend the debt limit until February. up the 2014 U.S. federal budget. Congress’ failure to Had Congress failed to do this, the United States could have approve the budget caused the temporary shutdown of defaulted on its debt, greatly damaging the world economy. “nonessential” expenses. House Republicans, often cited as causing the shutdown, stated they had serious concerns 10-12 percent: The approval rating of Congress throughout about the $740 billion deficit created by this budget. the month of October as found and reported by numerous polling agencies. 800,000: The estimated number of nonessential employees furloughed without pay during the initial days of $24B/ .6 percent: Standard and Poor’s estimate of the the shutdown. Some federal services or locations reopened nominal/percentage damage to third-quarter GDP recovery. with money from state governments a few days after the The shutdown damaged consumer spending and, coupled shutdown began. with the debt limit, the perceived credit worthiness of the United States. $76M: The amount of visitor spending at national parks lost each day during the shutdown according to the 1/15/2014: The day the current budget resolution expires. If National Park Service. The revenue from actual park fees is Congress cannot settle on a budget by that time, the United considerably lower than this amount. States could face another partial shutdown.

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U.S. Large Cap (Dow Jones Industrial Average) 15,545.75 (2.75%)

U.S. Mid/Small (Russell 2000) 1,100.15 (2.45%)

Foreign Large (MSCI EAFE Index Fund) 65.88 (3.26%)

Bond Market (Barclays Aggregate Bond Fund) 107.90 (0.65%)

• The International Monetary Fund (IMF) lowers its expectations for 2013 world economic growth from 3.1 percent to 2.9 percent. Though it believes future growth will improve, this marks the sixth consecutive downgrade the IMF has made in the past two years.

• Robert Shiller, Eugene Fama and Lars Peter Hansen are jointly awarded the Nobel Prize in Economic Sciences for their bodies of work in asset bubbles, efficient markets and economic statistics, respectively.

• A report from investment bank Credit Suisse finds that a staggering 35 percent of the wealth in Russia is owned by just 110 people (or .00000077 percent of the population). It is the greatest wealth disparity of any country (aside from some small island nations and credit shelters). By comparison, the United States has about 40 percent of its wealth held by the top 1 percent of its people.

• The central banks of Canada, England, the European Union, Japan, Switzerland and the United States announce a new arrangement to provide each other with reserves of foreign currencies when necessary. It is hoped the arrangement will help each country’s smaller banks maintain adequate liquidity across all currencies during a financial crisis.

• Janet Yellen officially receives President Obama’s nomination to become the next chair of the Federal Reserve. Yellen, who has worked as vice chair during Ben Bernanke’s tenure, is likely to continue the Fed’s current policies until the economy improves.

• Despite a strong quarter in their sector, several European banks made disappointing announcements at the end of October, revealing problems like government investigation, growing losses and high settlement costs.

• America gets its first look at the public health care exchanges created for the Affordable Care Act (Obamacare). The exchange websites receive initial criticism for buckling under heavy Web traffic, but later improve their performance. Congress eventually holds a public inquiry of the contractors responsible for the design of the exchanges.

Christmas Creep comes but once a year, but, thanks to “Christmas and by stretching out the season they aim to increase their creep,” Christmas spending can last almost an entire quarter. profits throughout the fourth quarter. Over time, the holiday Christmas creep, the appearance of holiday ads and sales sales cycle has trained consumers to look for deals and avoid earlier and earlier each year, has consumers facing armies of full-priced merchandise. If one store offers sales, the others inflatable Christmas lawn decorations when they head out in have to mark down goods, too, to stay competitive; when search of costumes. The holidays have seemingly one store puts elves on shelves in September, the rest must Christmatasticized into a three-month long celebration of follow or risk being left behind. The result is a cycle that may consumerism. But is this the nightmare before Christmas, or be hard to break in a recovering economy. is Christmas creep good for the economy? This raises the question: Is Christmas creep better for Christmas crept earlier than ever this year, with a record- consumers or retailers? On one hand, shoppers who start breaking September 9 ad featuring a giant early tend to be more organized and often make a list and a man literally creeping up on an unsuspecting office worker. budget, rather than scrambling at the last minute to buy “Don’t let the holidays sneak up on you,” the ad implores. A whatever hasn’t already been snatched up. On the other number of factors combine this year to make Christmas hand, buying early can mean buying often, and those who creep even more apparent, namely the late arrival of shop early spend on average 14 percent more than late Thanksgiving, and thus, , which will not occur shoppers, according to a 2011 survey by the American until November 29. Retailers will likely focus marketing Research Group. Statistical research of price fluctuations has efforts on pre-Black Friday sales to stretch the season longer. also concluded that the best deals are often found in early Hanukkah, on the other hand, is coming early this year, so December, not on Black Friday or pre-Black Friday creeping Jewish shoppers will have to begin shopping before Black sales. Friday, another incentive for stores to bring out the But Christmas may not be the economic boost that many markdowns early. Another factor is the absence of a believe it to be, regardless of how long the season lasts. The presidential election this year, which last year made airtime massive spending that occurs from September through too expensive for many stores to buy holiday ad space. December only lessens the amount consumers can spend The state of the economy can also affect the timing of during the rest of the year. The holidays merely compress the Christmas sales campaigns, which explains why Christmas spending into a few weeks. In that regard, at least Christmas has been creeping earlier in recent years—retailers are creep spreads the wealth over a few months rather than just forced to extend the buying season and tempt consumers one. with unbeatable sales, while budget shoppers appreciate the The bottom line is that stores wouldn’t participate in extra time to plan and save. Layaway made a comeback in Christmas creep if the practices weren’t profitable for them. the down economy, which by nature requires a longer sales If an extended holiday season annoys you, take solace in period. knowing that it can’t creep too much earlier—the back-to- Retailers know that Christmas spending is some of the school season is the second most wonderful time of the year highest of the year (there’s a reason they call it Black Friday), for retailers.

Kelly Pedersen CFP, CDFA [email protected] This article was written by Zywave LP, an entity unrelated to Channel Financial Wealth, LLC. The information contained in this (763) 231-7546 article is not intended to be tax, investment, or legal advice, and it may not be relied on for the purpose of avoiding any tax penalties. Channel Financial Wealth, LLC does not provide tax or legal advice. You are encouraged to consult with your tax advisor or attorney regarding specific tax issues. ©2012 Zywave LP. All rights reserved. 4800 Olson Memorial Highway Ste 150 Golden Valley, MN 55422