Could the election impact Black Friday and holiday spending? It might depend on your voting decisions.

Could the election impact Black Friday and holiday spending? It might depend on your voting decisions.
Could the election impact Black Friday and holiday spending? It might depend on your voting decisions.
  • Experts predict that supporters of President-elect Donald Trump may spend more on Black Friday, while Kamala Harris voters may tighten their budgets, according to CNBC.
  • The victory of Trump could positively impact holiday spending in some regions while negatively affecting it in others, as consumers tend to spend more when they feel better about the economy.
  • In the aftermath of the 2024 election, shipping volumes increased in several red states and decreased in many blue states.

This year, Black Friday is expected to have a new color scheme of red, white, and blue, as the outcome of the election was largely influenced by consumer sentiment and the economy.

CNBC examined shipping trends in red and blue states and interviewed shoppers in Texas, Michigan, New Jersey, New York, Connecticut, North Carolina, and Virginia to determine how the 2024 presidential election results could impact the holiday shopping season.

This holiday season, differences in opinion among supporters of President-elect Donald Trump and Vice President Kamala Harris could influence how much people spend, as those who voted for Trump were optimistic about the economy while Harris' supporters were more pessimistic about her policies' impact on the middle class.

Amanda Davila, a 30-year-old New York City educator, told CNBC she plans to spend less on the holidays this year and is being more cautious with her spending before Trump takes office in January.

"Davila expressed concern about her own student loans and the possibility of forbearance being lifted, as well as the potential financial burden if the SAVE Plan for student loan repayment is eliminated. She also mentioned the challenges of being a millennial, such as buying a house, affording groceries, and paying rent, given the limited income."

After Trump's victory, Armando Duarte, a 62-year-old retired utility worker from Fort Lee, New Jersey, feels more optimistic about the holiday shopping season.

"Duarte expressed optimism that people would feel more encouraged to spend as they may believe the economy is recovering. He believes that inflation will decrease, jobs will improve, wages will increase, and people will be able to afford a better standard of living."

In the months leading up to the 2024 election, retailers were concerned about the potential impact on sales and the holiday shopping season, which was already facing challenges such as a shortened time between Thanksgiving and Christmas. Many companies issued cautious guidance for the second half of the year due to concerns that the election would distract consumers from shopping or a prolonged certification process would lead to unrest and dampen sales.

With Trump's victory in the popular vote, there is a possibility that sales will increase in many regions, as his supporters believe that economic conditions will improve under his leadership. Experts predict that if Americans feel more optimistic about the economy, they will likely spend more money.

"According to Meir Statman, an expert in behavioral finance and a professor at Santa Clara University's Leavey School of Business, if people feel optimistic about the future, they are more likely to spend money, even if it is on a credit card, knowing or expecting that they will have the money to pay it off. This general optimism of Republicans is likely to affect their spending, while the sentiment of Democrats may be negatively affected, leading to decreased spending."

The way some Americans were shopping online after the election supports the argument.

Grip, an e-commerce logistics provider that specializes in the delivery of perishable goods and ships billions in merchandise across the country annually, analyzed the shipping patterns of blue and red states based on the total number of packages sent in the two months before and after the election.

In states where the GOP won, shipping volumes increased by 50.4%, while in states where Democrats won, volumes decreased by an average of 11.2%. Only two blue states saw shipping volumes increase after the election, while all others saw rates fall.

"According to Grip's CEO Juan Meisel, consumer sentiment can be significantly impacted by major events like elections, resulting in changes in eCommerce shopping behavior and logistics patterns. Following this year's election, there were significant shifts in spending activity, with some regions experiencing increased volumes as consumer confidence surged, while others saw declines."

According to a national consumer survey conducted after the election, GlobalData found that 51.3% of respondents believe a Trump presidency will positively impact the economy, while 13.5% plan to spend more this season due to his election. On the other hand, 7.2% of respondents said they plan to spend less.

According to a survey by retail analytics firm First Insight, one-third of consumers plan to cut their holiday spending due to the election.

"According to GlobalData managing director and retail analyst Neil Saunders, consumers have mixed feelings about the election result. However, on balance, there are more who see it as positive for the economy than those who see it as negative. If people feel good, they are more likely to spend a little more over the holidays. Trump may not have had a huge impact on Christmas, but as far as spending is concerned, he is more of a Santa-like figure than a Grinch."

Can Trump save Christmas?

Despite inflation and pandemic stimulus checks, sales projections from the National Retail Federation and consulting firms for the holiday shopping season were not as strong as expected.

This year's holiday retail sales forecast is expected to grow by an average of 3.68%, similar to the growth rate seen in the 10 years before the pandemic and after the Great Recession.

The NRF anticipates that winter holiday spending in November and December will increase by 2.5% to 3.5%. At the upper limit, this is almost equivalent to the pre-pandemic, 10-year average. However, at the lower end, it is 32% below the historical average.

Since 2018, the slowest growth in holiday retail sales was recorded at 1.8% from the previous year.

"Isaac Krakovsky, the consulting retail leader for EY Americas, stated that he believes they will have a difficult Christmas this year. He explained that all of his big clients are spending less on capital expenditures, and this is due to what they are seeing in the market."

Experts agree that a decisive victory in the election is good for business, regardless of the outcome.

"Although your person didn't win, having certainty is still better than uncertainty, as Aaron Cheris, a partner with consulting firm Bain & Company, stated. Typically, during election years, people may delay taking action until the outcome is clear, which could impact the results at the margin."

Despite the improvement in the economy after Trump's election, inflation remains a concern and may negatively impact holiday spending. Additionally, certain categories are predicted to perform better than others, potentially resulting in a winners and losers scenario for retailers in January.

Bain predicts that holiday sales for furniture and home furnishings will decline in the high single digits, while electronics and appliances will remain flat, and apparel and grocery will grow in the low single digits. This information was released earlier this week when companies like Abercrombie and Best Buy reported their earnings. Abercrombie provided strong holiday guidance, exceeding expectations, while Best Buy fell short, warning that demand for consumer electronics was decreasing.

The retail sales forecast becomes less clear and more negative when inflation is taken into account. The NRF's forecast does not account for inflation, and Bain and EY's predictions of 3% growth also do not factor in higher prices. When inflation is removed from the guidance, real growth is expected to be around 0.5%, according to Krakovsky. Cheris concurs that real growth should be much lower after inflation is taken into consideration.

Cheris stated that it was neither negative nor recessionary, but it was also not exciting.

During the years 2010 to 2019, holiday retail sales experienced an average growth of 4.41% after adjusting for inflation, as per Bain's analysis of published data. However, if real sales only increase by 0.5% to 1% this holiday season, it would represent a significant decline from the pre-pandemic historical average.

Despite the increase in prices, retail sales have been sustained due to inflation. However, shoppers interviewed by CNBC expressed their dissatisfaction with the impact of higher prices, regardless of their political leanings. While some plan to spend more this year, it's only because of the rise in prices, not because they're purchasing more items.

The holiday season has become a chore for Meri Pitts, a 24-year-old college student in Detroit who works in customer care due to the higher prices.

"Pitts stated that he enjoys shopping, even outside of holiday seasons, and loves to purchase small gifts for his friends. However, he lamented that the prices have increased so much that his long-standing pastime has become less enjoyable due to financial concerns."

CNBC's Michael Wayland, Melissa Repko, Sarah Whitten, and Kristian Burt provide additional reporting.

by Gabrielle Fonrouge

Business News