The cause of this feel-good period: relief the election – with all its negative ads – is over and the expectation that both political parties will put a greater emphasis on national unity.
“When you are knee-deep in a contentious campaign, there is a lot of negative rhetoric,” says Scott Krugman of the National Retail Federation in Washington. “Once it’s lifted, you get a kind of halo effect.”
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“With Obama winning and more optimism, those factors could on the margin help holiday spending,” says Michael Niemira, chief economist for the International Council of Shopping Centers, which commissioned the survey with Goldman Sachs. “But we don’t hold out hope for a huge lift.”
If more consumers do open up their purse strings somewhat, it would represent a change in plans. In mid-October, ShopLocal, which builds local-promotion websites for large US retailers, found that 59 percent of 3,000 shoppers said they planned to reduce their holiday spending. Only 4 percent said they planned to increase it.
“This is obviously about the stock market and jobs,” says Vikram Sharma, CEO of the Chicago-based company. “We measure the pulse of the shopper, and the pulse remains very faint.”
Yet Sharma says he can see how consumer sentiment might improve. The stock market rose 10 percent the week before the election and rose again on Election Day. The end of the campaign, he says, might also relieve a stress point on some consumers. “If one of the stress points is whether or not my guy is going to win the election, this is one less thing for [me] to stress about,” he says.
Economists warn, however, that America faces some difficult news about the state of its pocketbook such as Friday’s release of October unemployment numbers showing the unemployment rate went up.
“We are moving from historically low unemployment to troublesome levels,” Naroff says. “The reality is that businesses must protect themselves at this point because they don’t know how steep and long the downturn will be.”
Job losses are reverberating through Main Street, says Bruce Murdy, president of Rawle Murdy Associates, an advertising and public-relations firm in Charleston, S.C.
“Everyone knows someone who has been laid off. It is the dark cloud hanging over us,” he says. “We have seen it with our retail clients, where we are seeing people trading down,” he says. “If they go a restaurant, they are ordering hamburger instead of steak.”
Indeed, the readings for consumer confidence are at historical lows. And elections have had only a marginal effect on confidence, says Lynn Franco, director of the Conference Board’s Consumer Research Center in New York. “Whatever the trend was, it stays in place,” she says.
Franco is hoping for some noticeable improvement in consumer expectations for the future. “When confidence is this low, consumers are less willing to spend,” she says.
Historically, elections have been a short-term distraction. “This week has probably been like a ghost town in some retail stores,” says Bill Martin, co-founder of Chicago-based ShopperTrak, which provides information for retailers. “The fact the election is over means there will be fewer ads from the candidates on television and more promotions for merchandise. And so we might see some shoppers return to stores to some extent.”
In the next week or two, Martin would not be surprised to see some improvement in the retail climate as part of an emotional reaction to the election. “There is a lot of money on the sidelines, and maybe it will loosen up,” he says. “If it can carry over into the holidays, and we can get the banks to lend some money, the holiday season may not be disastrous but maybe will be flat to up a little bit.”
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