Advertising and marketing professionals are awakening from the winter “break” to guess how current events, most notably the U.S. presidential election, will affect consumer demand in the coming year. After the holiday, consumer confidence seems to be leveling with economic performance. However, the uncertainty of political outcomes means that any trend is on shaky ground.
Understanding the Election Year Consumer Mindset
Despite the feeling that the presidential election season never ends, a palpable sense of anticipation reverberates through the consumer market. It’s long been assumed that the election cycle tends to stimulate consumer spending, which sends ripples across the economic landscape.
Untangling Economic Narratives
When discussing how economic perspectives shape consumer sentiment amid election cycles, the narratives from the stump and debate stage become significant. Jack Kleinhenz, the National Retail Federation’s chief economist, emphasizes that election promises and politically leaning economic forecasts profoundly affect the public’s perception of the American economy. That, in turn, can impact consumer spending, which has post-election influence over GDP, at the expense of reducing an MBA’s worth of economics lessons into three words: rinse and repeat.
Hope King at Axios reported that the recent Harris Poll illustrates a nuanced dynamic where strong economic indicators exist alongside a perception of a faltering national economy. Post-pandemic shopping habits added an additional layer of complexity, making consumer behavior less predictable. It seems clear that the heightened polarization of news and information has consumers doubting any economic numbers that deviate from what they see at the pump and grocery aisle.
Election Years and Their Impact on Consumer Spending
Marketing author Walker Smith in “Presidential Election Impacts Consumer Spending” offers an analysis of historical spending patterns, which seem to point towards an “election year boost” in consumer expenditure. Financial analyst Steve Hansen showed that election years from 1988 to 2008 generally registered increased spending growth. After a strong season of holiday spending, analysts at the Conference Board note that consumers are finally cracking a Mona Lisa smile in a surge of optimism entering 2024. This could be bad news for the Republican nominee or too little too late for President Biden – time will tell.
Macroeconomic factors, like wars and a global pandemic can create sharp pivots in the economy and consumption of many product categories (toilet paper, hand sanitizer, and home office furniture, anyone?). Since no economic or political observation is complete without paraphrasing the great words of Taylor Swift, “I remember it all too well.”
The Enigma of Causation Between Elections and Spending
Most opinions and research on this topic touch upon an essential debate: is there any causative relationship between presidential elections and consumer spending? While it might be intuitive that the engagement and energy of election campaigns inherently lead to spending, is it driven by confidence, higher wages, or panic over an impending zombie apocalypse? This all suggests a more convoluted relationship.
Ray Fair, a Yale economist known for projecting election outcomes based on economic trends, contests the notion of campaign-driven consumer activity, asserting instead that the economy profoundly shapes electoral results, not the other way around. This assertion is supplemented by additional models correlating economic performance with voting outcomes, indicating that marketers expecting a spending surge in anything but swing state media may need to recalibrate their strategies. The quadrennial political demand for TV time may actually depress demand for some products because there is less airtime oxygen left for anything but politics, but that’s for another blog.
So What? Positioning for Success in an Election Year
Despite the lack of definitive causality, marketing professionals can still leverage the election narrative to engage more effectively with their audience. Smith’s insights reveal that election years present a unique opportunity to resonate with national discourse and align branding with prevailing consumer concerns.
Brands can seize the moment to associate themselves with key economic themes discussed during presidential debates, such as environmental responsibility, smart spending, and family, providing a platform for products and services that go beyond frugality or apprehension. Trust and integrity, already critical to consumers, gain amplified relevance during an election year, allowing savvy marketers to underscore their commitment to transparency and authenticity.
For those in the marketing and advertising sphere, elections in and of themselves are about as good a predictor of consumption trends as the Kentucky Derby. As with most economic indicators, the resolution of uncertainty tends to provide a bump no matter the tally from the Electoral College. Instead, it’s an opportune time to tell the stories that put products and solutions squarely in the frame of the themes that prevail in the election atmosphere. The key resides not just in riding the wave of increased spending but in crafting resonant, relevant narratives that reflect the values that consumers espouse and expect.
