No, The Presidential Election Won’t Harm Retail Sales

election_730x280.jpgIt happens every four years, but this year feels different - even if it isn't. 

Some hard-pressed journalist notices a downward trend in a given industry, and before you can say correlation doesn’t equal causation, they write an article blaming the presidential election. The NFL’s declining ratings? Election. Restaurant sales down? Must be Hillary’s fault. Housing market in a lull? Thanks Trump.   

And of these, no single industry invites more election-time, sky-is-falling prognostications than retail.  Just take a look on some of the things that have been published this year alone:

From Fortune:

“Uncertainty surrounding the presidential election could make consumers more cautious.”

From Fox Business:

“As we get closer to the day, retailers will struggle to find air time between all the political aids running and getting consumers’ attention. Consumers get bombarded and consumed with the election coverage…just look at the first debate, it brought in 60 million viewers who weren’t out shopping.”

And from CNBC

“Distraction and anxiety surrounding the presidential election will keep consumer spending in check until a winner is declared.”

But all of it couldn’t be further from the truth. Trust me... I mean, trust history.

Sentiment vs. Reality

Last year, researchers from Princeton and the University of Chicago conducted a study that reinforced the difference between sentiment and reality. They found after a switch in the controlling party following both the 2000 and 2008 elections, belief in the U.S. economy plummeted. In 2000, Democrats thought the U.S.’s worst days were ahead. In 2008, Republicans thought the good times had come to a crashing end.

They were both wrong.

"Respondents in Republican leaning counties become relatively more pessimistic about spending after the Obama election victory at exactly the same time they report becoming relatively more pessimistic on government economic policy. However, when we examine actual spending, we cannot replicate this finding,” according to the survey.

As it turns out, regardless of whether or not people felt the economy was tanking, their spending was unaffected. Researchers found zero correlation between presidential election cycles and retail. Consumers still regularly visited the mall, conducted their holiday shopping, purchased brand new automobiles, and generally carried on with their days as though the election had little impact on their day-to-day lives.

So, then, what gives? Why is retailer fear over presidential elections still a thing?

It’s all rumors

This past August, a survey was conducted among 102 retailer leaders who believe the election will have a “strong impact” on consumer spending during the second half of 2016. Thirty-three percent predicted it would have a positive impact on consumer spending, 31 percent said it would be negative, and 35 percent said it would be neutral.

But this belief in a “strong impact” isn’t rooted in anything tangible. No hard data. No studies. Just 102 surveyed people, where nearly an equal amount of each answered differently.

And yet that was enough for a publication like Retail Drive to write, “Historically speaking, presidential elections have a dampening effect on retail sales leading up to Election Day: The debates heat up, consumers tune in and shopping trips are put on hold. But this year's election cycle has been anything but typical. Analysts say the highly politicized rhetoric of both candidates has made the current election an even bigger distraction for consumers, causing some concern for retailers as they execute their holiday strategies.”

Again, there’s nothing backing up that claim.   

The bottom line

It’s undeniably true that consumers believe the election will have a direct impact on their purchasing habits, and that, combined with erroneous surveys and analyst opinions, makes for easy publication fodder. But a closer look at the data revels that it couldn’t be further from the truth.

Regardless of who prevails in November, the retail world will be just fine.


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Topics: retail trends, election

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