In the latest episode of “Why!?” hosted by Jeremy Bloom and sponsored by Attain, eMarketer senior analyst Zak Stambor and independent analyst and consultant Andrew Lipsman joined Bloom to discuss the presidential election and its far reaching effects on consumer sentiment and spending, both short and long term. The results of this historically tight election could mean vastly different outcomes for consumer spending and what happens to the economy at large.
Bloom starts by asking both guests about their takes on how consumer confidence might differ in a Harris or Trump victory. Lipsman has started to discount consumer confidence as a useful metric for the economy because it’s become so politicized. He cites public opinion polls taken throughout the course of 2016 leading up to the Clinton/Trump presidential election. Economic dissatisfaction rose from 23% to 32% throughout the course of the year until the election, when it effectively reset to the mid-teens immediately following Trump’s victory. “That was where I realized that some people just say the economy is bad to register disappointment with whoever's in office at that time,” said Lipsman.
Stambor, on the other hand, still puts stock in consumer confidence, saying that inflation is a good example of why it holds merit. Inflation has decreased since the Fed cut rates, but consumer sentiment still hasn’t recovered at the same scale. This means it’s going to take longer to see real recovery until consumer confidence rebounds, and that effect is very real.
While historically most brands have tried to steer clear of politics, more brands are becoming ensnared in the polarization, intentional or not. McDonald’s has been involved at several points in the election cycle for both candidates (Harris worked there as a teen, Trump handed out french fries at a drive-through). Elon Musk's support of Trump has undoubtedly linked Tesla with the campaign. Brand boycotts are becoming increasingly common and effective. “In the last few years, brands felt like they had to pick a side. Maybe it’s a byproduct of the polarized environment that we've been in, in the sense that you have to tap into the culture and be culturally relevant. I think we're seeing now it's not a good idea,” said Lipsman.
Short-term, consumer sales will drop as everyone is hyper-focused on the election results. This may play out over a series of weeks as we wait for the election to be called. Longer term, who gets elected will have major implications. “I think it's very safe to say that the three major prongs of Trump's economic vision—massive tariffs, mass deportation, and the lack of an independent Fed where he puts his thumb on the scale—will lead to inflation,” said Stambor. “So longer term, what I foresee if Trump wins is a real impact on the economy in a negative way. It will hurt consumer spending, even though real spending will go up because of inflation.”
Lipsman says that regardless of the result, people will still spend short-term, but holiday spending will shift to later in the holiday season once the election turmoil dies down. Longer term, if Harris is elected, he believes consumer spending will continue to recover due to the continuation of the current economic policies established under the Biden presidency. If Harris puts a minimum wage increase in place, this could increase consumer spending even further.
Lipsman says to stay focused on the here and now, because it’s going to be a while until any policies can be put into place that would affect consumer behavior. Consumers are looking at their bank accounts today, not necessarily towards the future. Stambor says the near term headwinds could be strong, and court cases and potential civil unrest could create a very rocky few months ahead, which marketers should do their best to steer clear of.
Take a break from refreshing the news and watch the full episode here.
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