Some of the taxpayers hit hardest by the law changes could also be for an unwelcome surprise this filing season. Higher-income taxpayers in high-tax states like California, New York and New Jersey were particularly at risk for an unexpected tax liability, Morgan Stanley analysts estimate. This is because taxpayers are more likely to have large deductions for state and local taxes paid on their federal returns. Mr. Trump's tax law capped at deduction, known as S.A.L.T., at $ 10,000 per household per year.
Across the country, unexpectedly large refunds would be a welcome injection of cash into an economy facing a potential slowdown. Business spending tapered in late 201
"An increase in refunds would be black of a shot in the arm at the right time, if it came in Q1, early Q2, "Mr. Feroli said. "It would be nice to have consumers sort of have something to smooth over that raw patch."
Ms. Zentner or Morgan Stanley
The shutdown, on the whole of an awful December for the stock market, has already contributed to a recent decline in consumer confidence. Such declines are typically associated with softening in spending behavior and increasing in savings as consumers' uncertain future.
"When the government is not functioning it quite scary for households," Ms. Zentner said. "You're just going to get up on top of another big pile of uncertainty, if their tax refunds are delayed."