How the 2024 election will impact Black Friday and holiday spending | Wilnesh News

Black Friday will take on new red, white and blue colors this year after many believe the election will be won or lost on consumer confidence and the economy.

CNBC analyzed shipping trends in red and blue states and spoke with shoppers in Texas, Michigan, New Jersey, New York, Connecticut, North Carolina and Virginia to better understand Learn how the outcome of the 2024 presidential election will impact the holiday shopping season.

People who voted for President-elect Donald Trump are overwhelmingly optimistic about the future of the economy, while supporters of Vice President Kamala Harris are more pessimistic and worry that the incoming president’s policies could leave the middle class The situation of the class becomes more difficult. In a world where emotions drive purchasing decisions, these differences in opinion could impact how much people end up spending this holiday season.

For example, Harris constituent Amanda Davila, a 30-year-old New York City educator, told CNBC that she plans to spend less on holidays this year and “try to be more cautious” about spending before Trump takes office. January.

“I’m worried about my own student loans and whether they’re going to be canceled for deferment, how much I’m going to owe if the SAVE program (for student loan repayment) is canceled, etc.,” Davila said. “As a millennial, Having to worry about buying a house, buying groceries, renting, etc., it’s very difficult with our income right now.”

Meanwhile, Armando Duarte, a 62-year-old retired utility worker and Trump voter from Fort Lee, New Jersey, told CNBC that he felt better about the holiday shopping season after Trump’s victory.

“I’m optimistic that people will be more motivated to spend because they may feel like the economy is probably getting better and recovering,” Duarte said. “I think things are going to really get better… I think inflation is going to come down. Employment opportunities are good but will get better and hopefully wages will rise and people will be able to afford basic living expenses.”

In the months leading up to the 2024 election, retailers worry about whether it will hurt sales and the all-important holiday shopping season, which already faces a bleak outlook due to the shortened time between Thanksgiving and Christmas and other challenges. Many companies have issued cautious guidance for the second half of the year, in part due to concerns that the election would distract consumers from shopping or that lengthy certification processes would cause turmoil and dampen sales.

However, now that Trump has decisively won the popular vote, the election seems likely to boost sales – at least in many parts of the country – as his supporters largely believe that under his leadership the economy will improve. If most Americans feel better about the economy, that means they’re likely to spend more, too, experts say.

“If they feel optimistic about things to come, then they are willing to spend more money, even on a credit card, because they know or expect they will have the money to pay it off,” says Mel Staman, an expert in behavioral finance. Professor at the Levy School of Business at Santa Clara University. “So overall, general optimism among Republicans is likely to influence their spending. We know that sentiment generally affects behavior, including spending, and conversely, it certainly may dampen sentiment among Democrats, and across the board possibility, negatively impacting their spending.

The way some Americans shopped online after the election supports that argument.

E-commerce logistics provider Grip, which moves billions of items across the country each year and specializes in perishable goods, has collected transportation data that shows different shipping patterns in blue and red states. The company examined the total number of packages sent in the two months before the election, the total number of packages sent to each state, and how that changed in the two weeks after the election.

In states won by Republicans, shipping volume increased by 50.4% after the election, while in states won by Democrats, shipping volume fell by an average of 11.2%. Only two blue states — Illinois and Minnesota — saw shipping volumes increase after the election, while all other states saw rates drop.

“Our data shows how major events such as the election can significantly impact consumer sentiment, driving changes in e-commerce shopping behavior and logistics models,” Grip CEO Juan Meisel told CNBC. “We saw a significant shift in spending activity following this year’s election. Changes have seen spending increase in some areas and declines in others as consumer confidence soars.”

In a national consumer survey conducted after the election, GlobalData found that 51.3% of respondents believed Trump’s election as president would have a positive impact on the economy, while 13.5% planned to increase spending this quarter following Trump’s election. . Conversely, 7.2% said they planned to spend less.

In a separate survey by retail analytics firm First Insight, one-third of consumers said they planned to reduce their holiday spending budgets because of the election.

Neil Saunders, managing director and retail analyst at GlobalData, said: “Consumers’ views on the election results are mixed. However, overall, more people think the election results will be good for the economy than those who think they are bad. “If people feel good , they are more likely to spend a little more during the holidays. Trump may not have a huge impact on Christmas, but in terms of spending, he is more like Santa Claus than the Grinch.”

Sales forecasts from the National Retail Federation and various consultants are down slightly heading into the holiday shopping season. It follows several years of strong growth, driven by inflation and pandemic stimulus.

NRF says it expects winter holiday spending in November and December grow between 2.5% and 3.5%. On the high end, that’s close to the pre-pandemic 10-year average, but on the low end, it’s 32% below the historical average.

No matter how you look at it, the forecast would be the slowest growth since 2018, when holiday retail sales rose 1.8% from a year earlier.

“I think we’re going to have a tough Christmas this year,” said Isaac Krakovsky, EY Americas consulting retail leader. “All my clients, the big clients, tell me Their capex is down. All of their customers, right? When every one of them is driven by what they’re seeing in the market, that makes me think we’re going to have a tough holiday season.

Most holiday forecasts were released before the election, so they didn’t take into account any impact of a Trump victory. But most experts agree that a decisive victory is good for business, no matter what.

“The good news is, certainty is better than uncertainty, even if your people don’t win … so I think that will help,” said Aaron Cheris, a partner at consulting firm Bain & Company. “Typically, in election years, you see some backloading, where people may not be doing things ahead of time because they’re waiting to see what happens, so will you see some of that on the fringe? Probably.”

While many Americans appear to feel better about the economy after Trump’s election, inflationary pain remains and is expected to dampen holiday spending. Additionally, some categories are expected to perform better than others, which could create another winner-and-loser situation for retailers in January.

Holiday sales of furniture and home furnishings are expected to post high-single-digit declines, electronics and appliances are expected to be flat, while apparel and groceries are expected to post low-single-digit gains. Bain’s prediction. The differences between these categories were revealed earlier this week, when companies like Abercrombie & Fitch and best buy Earnings reported. Abercrombie issued strong holiday guidance ahead of schedule, while Best Buy missed expectations, warning that demand for consumer electronics was weakening.

When inflation is taken into account, retail sales forecasts become murkier or even worse. NRF’s forecast is not adjusted for inflation, nor are Bain and EY’s 3% growth outlook. Krakovsky estimated that if price increases were excluded from guidance, actual growth would be expected to be around 0.5%. Sherris agreed that after accounting for inflation, real growth should be much lower.

“It’s not negative, it’s not a recession, but it’s not exciting,” Sherris said.

Data analysis released by Bain shows that between 2010 and 2019, after deducting inflation factors, holiday retail sales grew by an average of 4.41%. If actual sales grow by only 0.5% to 1% this holiday season, that would be a significant decline from the pre-pandemic historical average.

Overall, inflation has been supporting retail sales over the past few years, and many shoppers interviewed by CNBC lamented the impact of higher prices, regardless of their political affiliation. Some people say they plan to spend more this year, but only because prices have risen, not because they’re buying more.

For Meri Pitts, a 24-year-old college student who works in customer service in Detroit, higher prices make the holidays feel more like a chore than something to look forward to.

“I’m the kind of person who, even if it’s not the holidays, I like to go shopping. I like to buy little gifts for my friends and stuff like that,” Pitts said. “Prices have skyrocketed to the point where I’ve enjoyed this pastime since high school…it just isn’t as fun as it used to be because now I’m more worried about going broke. It’s like giving people the gifts that I think they deserve.” “

—Additional reporting by CNBC’s Michael Wayland, Melissa Repko, Sarah Whitten and Kristian Burt