How the 2024 election will impact Black Friday, holiday spending

This year’s Black Friday is poised to take on new shades of red, white and blue, following an election that many say was won or lost on consumer sentiment and the economy.

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

Those who voted for President-elect Donald Trump were overwhelmingly positive about the future of the economy, while supporters of Vice President Kamala Harris were more pessimistic, saying the president-elect’s policies will make things even harder for the middle class. I was concerned that this might be the case. In a world where sentiment drives purchasing decisions, these differences in opinion could determine how much people ultimately spend this holiday season.

For example, Amanda Davila, a 30-year-old Harris voter and New York City educator, told CNBC she plans to cut back on holiday spending this year and is “more cautious” about spending in the lead-up to Trump’s inauguration. I’m trying to be that,” he said. January.

“I’m worried about my student loans, whether they’ll be forgiven, and how much I’ll end up paying if I take advantage of the SAVE plan.” [for student loan repayment] “It’s very difficult being a millennial and having to worry about buying a house, buying groceries, paying rent, everything,” Davila said. Our income is not enough to cover everything these days. ”

Meanwhile, Armando Duarte, 62, a former utility worker who voted for President Trump and lives in Fort Lee, New Jersey, told CNBC that he feels much better about the holiday season since Trump’s victory. he said.

“I’m optimistic that people will be encouraged to spend a little bit more because the economy is on the mend and people may feel like it’s going to recover,” Duarte said. “I think things are going to go in a really good direction… I think inflation is going to go down, employment is good, but I think it’s going to get even better, and hopefully wages will go up, and people will basically be able to survive. There will be enough room to go.”

In the months leading up to the 2024 election, retailers worried that it would hurt sales and the all-important holiday season. The holiday season was already facing a difficult outlook due to challenges such as the shortened period between Thanksgiving and Christmas, among other things. Many companies issued cautious guidance in the second half of the year, in part because the election distracted consumers from shopping and the prolonged election certification process sparked social unrest, causing sales to slump. There were concerns about doing so.

But now that Trump has won, the election result seems likely to boost sales, at least in many parts of the country, as Trump’s supporters believe his direction will improve economic conditions. . Experts say people are likely to spend more if the economy improves.

“People who are optimistic about the future are more likely to spend more money, even on credit cards, because they know or expect they will have enough money to pay them off. ” says Meir Statman. He is an expert in behavioral finance and a professor at Santa Clara University’s Leavey School of Business. “Thus, Republicans’ overall optimism is likely to influence their spending as a whole. Although we know that emotions generally influence people’s behavior, including spending, , on the contrary, it could understandably depress Democratic sentiment. It could possibly have a negative impact on spending.”

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

Shipping data collected by Grip, an e-commerce logistics provider that ships billions of items across the U.S. each year and specializes in delivering perishable goods, shows different shipping patterns in blue and red states. The company looked at the total number of packages shipped and the percentage of packages that arrived in each state in the two months before the election, and how that changed in the two weeks after the election.

In states won by Republicans, shipments increased by 50.4% after the election, while in states won by Democrats, shipments decreased by an average of 11.2%. Only two blue states, Illinois and Minnesota, saw their shipments increase after the election, while rates decreased in all other states.

“Our data shows that major events like elections have a significant impact on consumer sentiment, leading to changes in e-commerce shopping behavior and logistics patterns,” Grip CEO Juan Meisel told CNBC. This shows that it has the potential to promote “We saw a significant shift in spending activity after this year’s elections, with some regions seeing an increase in spending as consumer confidence increased, while others saw a decline.”

In a national consumer survey conducted by Global Data after the election, 51.3% of respondents believed that President Trump’s inauguration would have a positive impact on the economy, and 13.5% said they would be less likely to spend this season after Trump’s election. It turns out that they are planning to increase the number of Conversely, 7.2% said they intended to reduce their spending.

A separate survey conducted by retail analytics firm First Insight found that one-third of consumers said they planned to reduce their holiday spending budget because of the election.

“Consumers have mixed feelings about the election results, but overall, more people see them as positive for the economy than negative,” said Neil Saunders, managing director and retail analyst at GlobalData. There are more people,” he said. “If people are feeling good, they’re more likely to spend a little more during the holidays. Trump may not have had a big impact on Christmas, but as far as spending goes, he’s more like Santa than the Grinch.” He is a great person.” ”

Heading into the year-end sales season, sales forecasts from the National Retail Federation and several consulting firms are somewhat flat due to the effects of the holiday season. It followed years of strong growth, supported by inflation and pandemic stimulus.

NRF said it expects winter holiday spending to be in November and December. grow between 2.5% and 3.5%. This is close to the pre-pandemic 10-year average on the high end, but 32% lower than the historical average on the low end.

Whichever way you look at it, this forecast would represent the slowest growth in holiday retail sales since 2018, when they rose 1.8% from a year earlier.

“I think Christmas is going to be tough this year,” said Isaac Krakowski, head of consulting retail at EY Americas. “All my clients, big clients, are saying they’re spending less money. [capital expenditures]. That’s all, right? If each of them is driven by what they see in the market, I think it’s going to be a tough holiday season. ”

Most holiday forecasts were released before the election, so they didn’t factor in the impact of a Trump victory. However, most experts agree that a definitive outcome is somehow good for business.

“The good news is, even if you don’t win, certainty is better than uncertainty… so it helps,” said Aaron Cheris, a partner at consulting firm Bain & Company. I think so,” he said. “Typically in election years you see a little bit of backloading where people may not have acted earlier because they were waiting to see what would happen. So you see a little bit of that, right? Is that so? Probably.”

Many Americans appear to feel that their economic situation has improved following President Trump’s election, but the pain of inflation is lingering and holiday spending is expected to be curtailed. Additionally, some categories are expected to outperform others, potentially creating a new winner-loser situation for retailers in January.

The paper said holiday sales for furniture and home furnishings are expected to decline in the low single digits, electronics and appliances are expected to be flat, while apparel and groceries are expected to grow in the low single digits. . Bane’s prediction. These differences between the categories were highlighted earlier this week when companies such as: Abercrombie & Fitch and best buy Reported earnings. Abercrombie issued guidance for a strong holiday season ahead of expectations, while Best Buy, which warned of weaker demand for consumer electronics, came in below expectations.

Retail sales forecasts become a bit more cloudy and even worse when you factor in inflation. NRF’s forecasts are not adjusted for inflation, nor are Bain and EY’s 3% growth forecasts. Once inflation is removed from guidance, real growth is expected to reach around 0.5%, Krakowski said. Cheris agreed that real growth should be even lower once inflation is taken into account.

“It’s not a negative situation, it’s not a recessionary situation, but it’s not an exciting situation,” Cheris said.

From 2010 to 2019, holiday retail sales increased an average of 4.41%, adjusted for inflation, according to an analysis of data published by Bain. If real sales grew only 0.5% to 1% this holiday season, that would be a significant decline from the historical average before the pandemic.

Overall, inflation has supported retail sales in recent years, and many shoppers interviewed by CNBC, regardless of their political affiliation, lamented the impact of higher prices. Some people say they plan to spend more this year, but that’s only because prices are high, not because they’ll buy more things.

For Meri Pitts, a 24-year-old college student who works in customer care in Detroit, high prices have made the holiday season more of a chore than a joy.

“I’m the type of person who loves going shopping, even if it’s not the holiday season. I love getting little presents from my friends,” Pitts said. “Prices have gone up so much that the pastimes I’ve literally enjoyed since high school aren’t as enjoyable as they used to be, because now I’m more worried about breaking my money. I’m all about giving people the gifts I think they deserve. ”

—Additional reporting by CNBC’s Michael Weiland, Melissa Repko, Sarah Witten and Christian Burt