Will the Presidential Election Affect Consumer Spending?

It’s a question that business owners and marketers have been asking. Will the outcome of our US presidential election affect consumer spending? With the degree of media attention this year’s election has received, and the craziness of its daily twists and turns, the question is more discussion-worthy than previous elections.

Let’s look at three different indicators: consumer spending activity, confidence trends in the economy, and previous research.

Consumer spending remains strong

Gallup reports this topic very well and you can see how spending has remained fairly steady for the last three years.

Screen Shot 2016-08-09 at 10.16.34 AMConfidence in the economy continues to decline

When there are small signs that things will worsen, this sentiment can also be exaggerated by people “thinking it’s time for a decline”—because historically it happens every 8-10 years.

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There is little evidence showing that consumer spending is influenced by elections

When it comes to consumer spending and election cycles, the most widely-cited piece on this topic was a joint study by Princeton and the University of Chicago Business School. In summary, there is no correlation to consumer spending and US elections. They do affect the sentiment of people, but that hasn’t shown to significantly affect the spending of consumers.

 

You can read the overview of that study here, or see the full report here.

So, will the November election affect consumer spending either here in the northwest or nationally? Probably not. What’s most likely to happen is that no matter who wins on November 8th, people will still go out and upgrade their phone (to post their feelings about the winner), go out to dinner (to complain with friends), buy winter gear (to finally escape all the political media coverage) and go on living their lives.