Whether it’s during company conference calls or coffee-shop chatter, many individuals with an interest in auto financing are keeping a close watch on this tax season, especially in light of the longest government shutdown already unfolding to begin 2019 and elected lawmakers continuing to squabble to keep agencies like the Internal Revenue Service fully functioning.

Credit Acceptance senior vice president and treasurer Doug Busk gave a frank answer even before the latest IRS data available showed how much softer this tax season already is at least in the opening stages.

Busk began his reply to an investment analyst’s question during the company’s latest conference call on Jan. 31 by saying, “I don’t think we really know.

“There’s a lot that has been written about potential delays due to the government shutdown. There’s been a lot written relative to the size of refunds versus what consumers have historically received. We don’t know what’s going to transpire so we’ll deal with it when it comes,” Busk continued.

According to the latest statistical update posted by the IRS as of Feb. 1, the tax collector has processed 13.3 million individual tax returns. That’s down by 25.8 percent year-over-year.

And as of that update, the IRS has pushed out $8.5 billion in refunds; a figure 30.3 percent lower year-over-year.

Furthermore, the IRS said the average refund for filers so far this tax season dropped below $2,000, coming 8.8 percent lower than the same juncture a year ago at $1,901.

Perhaps, an element skewing the data a bit is the fact that by law, refunds cannot be issued before Feb. 15 for tax returns that claim the Earned Income Tax Credit or the Additional Child Tax Credit. Officials said this stipulation applies to the entire refund — even the portion not associated with the EITC and ACTC.

The stage already was set for a complicated tax season long before uncertainty over whether or not the federal government will be funded and fully open for business after the stopgap action taken by President Trump and Congress expires Friday. Cox Automotive research manager Zo Rahim explained the situation after a press conference at NADA Show 2019 in San Francisco.

“We estimated that the tax withholding tables were adjusted aggressively and withholdings have adjusted by a larger percentage than the tax rate change implied. There is a fraction of the population that they could see an average refund smaller than they received previously. If they thought they were going to get the same level, they might not this year,” Rahim said.

“Consumers might have to owe more than they previously had. If you’re thinking, ‘I might get a refund,’ and it’s smaller, they might change your consumption pattern. And if you owe, and you don’t have money saved up because you thought you were getting a refund, that could have an impact on consumption,” he continued.

“We want to stress that not everyone is going to have this impact, because remember there are 100 million plus tax filers in the U.S. But even, if it’s 1 or 2 million, if that happens to them, it could have trickle impact,” Rahim went on to say.

If consumers have less money to put toward a down payment or perhaps get an account out of delinquency, those circumstances could trigger even more tightening of underwriting; a trend Rahim and the Cox Automotive team were already expecting.

“In 2015, we saw pretty loose credit, and then we saw some tightening in ’16, ’17 and the first part of ’18. But then in the second half of 2018, we saw, specifically in subprime, lenders get more aggressive,” Rahim said.

“What this means is the interest rate they were charging versus the Fed funds rate, that spread decreased, meaning they took money off the table to chase that subprime borrower and get them into a vehicle,” he continued. “We know that’s not sustainable, because you can’t sustain growth on subprime. We made that mistake once. I don’t lenders are going to make that mistake again.

Rahim went on to say, “2018 was a very weird year. I think lenders made one last effort to push as many sales as they could because the retail market is declining.”

While tax season might be full of uncertainty, the situation might be part of the reason why the Federal Reserve is not as active in 2019 as it was a year ago. Policymakers already passed on their first chance of the year to raise interest rates after increasing them four times in 2018.

The Fed meets again on March 19 and 20.

Coming into this year, we thought there maybe three hikes in 2019 after there were four in 2018. But recent stock market volatility plus some concerns about China and Europe and what oil is doing, it looks more like we’re looking more like one or two rate hikes,” Rahim said during the NADA convention in late January.

“We don’t think there is going to be a rate cut environment. Some were talking that the volatility in December means we’re going to have cuts in 2019. But if you look at the stock market now, things have rebounded. They’re starting to look better. There isn’t much that suggests that the Fed is going to be aggressively like they were in 2018. Four hikes, I think is off the table,” he went on to say.