October 7, 2024
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Do Elections Impact Holiday Spending?
Although several retailers on recent quarterly calls have called out anxiety around the presidential election as a risk to holiday spending, its impact remains debatable.
An Ipsos survey of nearly 1,100 U.S. adults taken on the first two days of October found 51% indicating that the election has no impact on their spending.
“Generally, there’s not a lot of evidence that elections change spending too much,” said Ipsos in a statement. “Consumer confidence tends to pause in periods around elections, but given America’s generally low voter turn-out, many aren’t phased by elections one way or another.”
Research conducted by The University of Chicago Booth School of Business in partnership with Princeton University analyzing four presidential elections from 2000 to 2013 found consumer sentiment declined for those seeing their candidate lose, but other factors such as weather, unemployment rates, and interest rates play a bigger role in affecting spending.
The authors concluded, “Despite individuals becoming quite pessimistic on government economic policy when their party loses the White House, it does not appear to affect household spending in a significant manner.”
The latest two contentious elections wound up delivering better-than-expected holiday gains:
- In 2016, U.S. retail sales in November and December grew 4%, topping NRF’s forecast that year of 3.6% and a gain of 3% in holiday 2015.
- In 2020, sales surged 8.3% during the November-December holiday season at the height of the pandemic. NRF had forecast a gain in the range of 3.6% to 5.2%.
Past research from ShopperTrak, Adobe Analytics, and Epsilon found that a pullback is common in the few weeks prior to election day due to the distractions from election coverage, followed by recovery afterward.
Still, several holiday forecasts cite risks tied to the election. A Yahoo News/YouGov poll taken in September found that 67% of Americans are anxious about the November election, a 7-point increase from four months ago.
Gordon Brothers’ experts forecast modest holiday selling gains, citing “increased uncertainty around the election, rising unemployment, stock market volatility, and weak manufacturing data pointing to a slowdown” despite favorable economic indicators, including the recent rate cut, stronger-than-expected consumer confidence, and dwindling inflation rate.
President Biden’s surprise exit from the race added another level of uncertainty for consumers this election year.
“We are definitely in uncharted territory as far as election years and presidential elections go,” Sky Canaves, principal retail and e-commerce analyst at market research firm Emarketer, told Vogue Business. “There’s a great deal of unpredictability and consumer sentiment that’s down to factors outside of the election, and that the election could have an impact on as well.”
Several retailers likewise cited elections among the factors behind cautious holiday outlooks on recent investor calls.
When asked about the election’s potential impact on Walmart’s second-quarter analyst call, John David Rainey, Walmart’s CFO, indicated that it could have some impact. He answered, “[The] good thing about elections is they come along every four years and we get to have a lot of history with seeing the impact of that. As I noted in my prepared remarks, given the state of the economy, the election, state of affairs globally, there’s reason to be appropriately measured in our outlook for the back half of the year, but effectively nothing has changed for that period of time relative to what we thought at the beginning of the year.”
Speaking at Goldman Sachs’ investor conference in early September, Ted Decker, Home Depot’s president and CEO, said “some general uncertainty” has households putting off larger pilots, citing concerns about when mortgage rates may go down, the potential recession, and “even things like the election.”
On Target’s first-quarter analyst call, Christina Hennington, chief growth officer, said, “Even as inflation moderates and we see sequential improvement in discretionary category trends, higher interest rates, uncertainty around the future of the economy, continued social and political divisiveness, and the upcoming election cycles have consumers concerned about what lies ahead.”
BrainTrust
Dick Seesel
Principal, Retailing In Focus LLC
Melissa Minkow
Director, Retail Strategy, CI&T
Jenn McMillen
Chief Accelerant at Incendio & Forbes Contributing Writer
Recent Discussions
Discussion Questions
Do elections in general have much of an impact on holiday selling?
Is this year’s election any different?
Poll
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We have analyzed this in depth, looking at retail sales and elections back to the 1940s. The impact is minimal. Consumers take elections in their stride.
Historically, during an election year retail sales growth rates slow marginally after the first quarter. Perhaps because consumers become more distracted. However, in every election cycle, sales growth rebounds once the election is over and the important holiday season approaches.
Growth is usually a lot faster in years where there is a change of administration, maybe because consumers are excited for a shift in policies or anticipate better things on the horizon. However, it has to be said that, in the past, a lot of this is driven by elections in which the public wasn’t so closely divided and divisive about the candidates. So, we will need to see how the numbers play out this time around.
Since elections are over three weeks before black Friday, they do not really distract from holiday shopping. Political commercials may have a negative effect early on, resulting in less advertising of holiday gifts and retailers that sell them. It would still have a very small impact.
Certainly they must increase booze sales! Gallows humour aside, no, I don’t think they do; and as I see that as a general rule, I see no exception(s) this year.
A big piece of the answer is dependent on when you define the start of Holiday spending. There is clearly a notable, but small, amount of pre-election conservative spending due to consumer discomfort related to the election. I was taught by a very smart retail executive early in my career that you never get back all of the lost sales when consumers skip spending for any reason including, fiscal or economic apprehension, weather, or lack of inventory. In summary if you of the school that holiday spending starts in mid-October then the election will have an overall minor negative impact in total holiday spending. Additionally, it will also push greater spending to later in the season,
My experience lines up with Neil’s studies of the topic: Most of the impact of a Presidential election has dissipated long before most people have done their shopping. Certainty is better than uncertainty, and the only exception I can think of was the Bush-Gore election of 2000, in which the outcome took weeks to determine. The disruptions caused by this year’s hurricane season are likely to be more disruptive than the election outcome.
Watch for consumer spending to uptick as soon as political ads cease and glossy retailer pitches overtake the airwaves. Despite all the doom-and-gloom economic news, many sources say spending is going to either rise or stay close to last year’s levels. The US was just barely edged out by China as having the most online shopping transactions in the world (so says statista.com), and the US consumer spends more per person on “stuff” than other spendy countries like China, Germany, the UK, and Japan (fact check me at ncesc.com should you wish). The punchline: we love to shop, we love stuff, and we’re trained to shop hard at the holidays. Expect that trend to continue.
I really believe that the only thing that has a significant impact on spending is inflation and perceived wealth. I don’t see the election causing much impact on spending/growth.
The period of uncertainty before the election pauses some decisions, both for consumers as well as business leaders. We’ve witnessed this through much of 2024 thus far.
Once past the election, regardless of the outcome, there is an aura of relief – while some are disappointed for sure, we are collectively over the attack ads, campaign events, and overall distractions. Consumers can shop for the holidays with a more positive outlook.
The game of Chicken Little we play every four years is such a distraction and excuse. Most people don’t vote. Most people don’t pay attention. Most people don’t care about elections or results and they definitely don’t change the course of their consumer habits because of a single election result. That’s just how it is. On November 6th the sun rises and consumers spend money… despite what you may hear on TV or read online/in print (you know, the news and opinion sources that are incentivized to sensationalize). No impact on holiday spending.
No. They do not.
This year’s election could have a major impact on B2B spending on ads. Since the names on the ballot changed in July, more consumers have been tuning in with their eyeballs glued to the political drama. Formerly disenfranchised voters are now invested in the outcome. In response, more brands may buy off-site ads where consumers pay close attention to politics (news sites, TikTok, X, Facebook) or seek an escape with non-political content (Netflix, Prime Video, Instagram, Pintrest).
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We have analyzed this in depth, looking at retail sales and elections back to the 1940s. The impact is minimal. Consumers take elections in their stride.
Historically, during an election year retail sales growth rates slow marginally after the first quarter. Perhaps because consumers become more distracted. However, in every election cycle, sales growth rebounds once the election is over and the important holiday season approaches.
Growth is usually a lot faster in years where there is a change of administration, maybe because consumers are excited for a shift in policies or anticipate better things on the horizon. However, it has to be said that, in the past, a lot of this is driven by elections in which the public wasn’t so closely divided and divisive about the candidates. So, we will need to see how the numbers play out this time around.
Since elections are over three weeks before black Friday, they do not really distract from holiday shopping. Political commercials may have a negative effect early on, resulting in less advertising of holiday gifts and retailers that sell them. It would still have a very small impact.
Certainly they must increase booze sales! Gallows humour aside, no, I don’t think they do; and as I see that as a general rule, I see no exception(s) this year.
A big piece of the answer is dependent on when you define the start of Holiday spending. There is clearly a notable, but small, amount of pre-election conservative spending due to consumer discomfort related to the election. I was taught by a very smart retail executive early in my career that you never get back all of the lost sales when consumers skip spending for any reason including, fiscal or economic apprehension, weather, or lack of inventory. In summary if you of the school that holiday spending starts in mid-October then the election will have an overall minor negative impact in total holiday spending. Additionally, it will also push greater spending to later in the season,
My experience lines up with Neil’s studies of the topic: Most of the impact of a Presidential election has dissipated long before most people have done their shopping. Certainty is better than uncertainty, and the only exception I can think of was the Bush-Gore election of 2000, in which the outcome took weeks to determine. The disruptions caused by this year’s hurricane season are likely to be more disruptive than the election outcome.
Watch for consumer spending to uptick as soon as political ads cease and glossy retailer pitches overtake the airwaves. Despite all the doom-and-gloom economic news, many sources say spending is going to either rise or stay close to last year’s levels. The US was just barely edged out by China as having the most online shopping transactions in the world (so says statista.com), and the US consumer spends more per person on “stuff” than other spendy countries like China, Germany, the UK, and Japan (fact check me at ncesc.com should you wish). The punchline: we love to shop, we love stuff, and we’re trained to shop hard at the holidays. Expect that trend to continue.
I really believe that the only thing that has a significant impact on spending is inflation and perceived wealth. I don’t see the election causing much impact on spending/growth.
The period of uncertainty before the election pauses some decisions, both for consumers as well as business leaders. We’ve witnessed this through much of 2024 thus far.
Once past the election, regardless of the outcome, there is an aura of relief – while some are disappointed for sure, we are collectively over the attack ads, campaign events, and overall distractions. Consumers can shop for the holidays with a more positive outlook.
The game of Chicken Little we play every four years is such a distraction and excuse. Most people don’t vote. Most people don’t pay attention. Most people don’t care about elections or results and they definitely don’t change the course of their consumer habits because of a single election result. That’s just how it is. On November 6th the sun rises and consumers spend money… despite what you may hear on TV or read online/in print (you know, the news and opinion sources that are incentivized to sensationalize). No impact on holiday spending.
No. They do not.
This year’s election could have a major impact on B2B spending on ads. Since the names on the ballot changed in July, more consumers have been tuning in with their eyeballs glued to the political drama. Formerly disenfranchised voters are now invested in the outcome. In response, more brands may buy off-site ads where consumers pay close attention to politics (news sites, TikTok, X, Facebook) or seek an escape with non-political content (Netflix, Prime Video, Instagram, Pintrest).