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An economic lift after the vote?

Relief that the election is over could put some consumers in more of a spending mood.

By Ron SchererStaff writer of The Christian Science Monitor / November 6, 2008

SOURCE: Reuters/University of Michigan Surveys of Consumers/Rich Clabaugh/STAFF


New York

No one can predict how long it will last, but economists expect the economy to get an Obama bump, which could give retailers something to smile about this fall.

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The cause of this feel-good period: relief that 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."

On Tuesday, a survey found that consumers ranked the election as the second most important factor in their holiday spending plans, only trailing the high cost of living. The survey also found that 8 percent of households, considered a modest amount, would increase their spending with an Obama victory.

"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."

Hope of improvement

Yet Mr. Sharma says he can see how consumer sentiment might improve. The stock market rose 10 percent last week 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. On Friday, the Labor Department reports the unemployment numbers for October. The unemployment rate could jump to 6.3 percent from 6.1 percent, predicts Joel Naroff of Naroff Economic Advisors in Holland, Pa.