How's Business in the Sequestration Capital of the U.S.?

Booming, say the shopkeepers. (Of course, they are the shopkeepers.) To hear them tell it, residents of Washington, D.C., far from hunkering down in the face of austerity, are throwing caution, and their disposable income, to the wind -- at least in the luxury sector.

“We were certainly anticipating feeling the effects of the sequester,” says Matthew Rosenheim, president and co-owner of Tiny Jewel Box , a high-end watch and jewelry store downtown. “We’ve had the best June, July and August in the history of our company.” Rosenheim cites Rolex watches as a best-seller, along with what he describes as the bridal side -- engagement rings, wedding bands and gifts.

It isn't just niche status objects. “Our last month was our best month ever,” says Justin Kline, a salesperson at Bicycle Pro Shop , which sells brands like Cannondale and Colnago. Kline says sales have been strongest for bicycles priced around $4,000. “I can’t give an exact number, but I’d estimate we cracked over $175,000 in sales during August,” he says.

Nancy Pearlstein, owner of the boutique Relish in Georgetown, which sells brands like Marni and Maison Martin Margiela, also reports strong sales. When asked if she’d felt any signs of the sequestration’s effects, her answer was immediate: “Not even a little.” This season, she says, classic clothes like austere dresses and simple cashmere sweaters have sold well.

Not so at Washington Engraving Co. , a stationery store that also makes plaques and other engravings and has direct contracts with government agencies.

“It was pretty instantaneous,” says owner Mark Pearlman. “We do a lot of work for the Justice Department, the USDA, the Veterans Administration and others.” Pearlman says business really began to sink as summer began. “Around June they had to do a year’s worth of cuts in three to four months," he says. "It really seemed like we had a revolving door of each agency trying to cut back on what they were buying.” He has begun to look elsewhere for business. “We’re moving towards financial, education and non-government agencies,” he says.

Perhaps his business is the exception. Or perhaps the new economic reality hasn’t yet set in.

“You’ll have to ask me a month from now,” says Relish’s Pearlstein. “For the moment, everything is going according to plan. Knock on wood.”

James Tarmy reports on arts and culture for Bloomberg Muse, the arts and leisure section of Bloomberg News.

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