Congress gave us a big surprise over the weekend: a bipartisan budget deal.

Most political watchers were bracing for the US government to shut down at midnight on Sunday, as ultra-conservative House lawmakers held up funding measures until their party’s leaders agreed to include deep spending cuts. Instead, the last-minute agreement saw Democrats and many more moderate Republican legislators pass a resolution keeping the government open for another 45 days.

The temporary end to the shutdown threat is a relief to the fashion industry (and not just for Birkenstock, which might have seen its initial public offering delayed if regulators were furloughed). The budget fight came at a delicate time. Over the summer, there was growing optimism that the US Federal Reserve had beaten inflation without inflicting too much pain on ordinary people. Since then, higher gasoline prices, rising mortgage rates and tumbling stock prices have resurrected recession fears. Consumer confidence gauges are falling, with the Conference Board’s index hitting a four-month low last week. Many retailers are also grappling with a surge in shoplifting.

A shutdown would have almost certainly made things worse on all of those fronts. Millions of federal workers, from air traffic controllers to soldiers, would stop receiving paychecks, even if many were still required to turn up to work. Travel plans would have been disrupted as airport security workers called in sick rather than work without pay, as many did during the last shutdown, in 2018 and early 2019. And on a psychic level, turmoil in Washington and concerns about the country’s future can put shoppers in a dour mood.

This weekend’s agreement may only provide temporary relief, however. The conservative lawmakers could have more success with the same tactics in a month and a half, or take their revenge by trying to depose House Speaker Kevin McCarthy, throwing the chamber into turmoil in the middle of sensitive budget negotiations. That could result in a shutdown in November, a worst-case scenario for retailers as it would hammer the economy right at the height of the holiday shopping season. Alternatively, more-sensible legislators could call the conservative caucus’s bluff, and use the 45 days to arrive at a long-term deal to keep the government’s lights on.

All the fashion industry can do is watch and wait.

What Else to Watch for This Week

Sunday

Black History Month begins in the UK

Paris Fashion Week: Balenciaga, Valentino, Casablanca, Y/Project

China’s Golden Week begins

Monday

Paris Fashion Week: Stella McCartney, Zimmermann, Louis Vuitton, Sacai, Mugler, Maison Margiela

Eurozone reports August unemployment data

Birkenstock reportedly begins its investor roadshow, the final step before an initial public offering planned for later this month.

Tuesday

Paris Fashion Week: Chanel, Miu Miu

Wednesday

Eurozone reports August retail sales

Thursday

Levi’s reports quarterly results

Friday

US reports August employment data

The Week Ahead wants to hear from you! Send tips, suggestions, complaints and compliments to brian.baskin@businessoffashion.com.