Thomson Reuters
- Companies from United to Nestlé have talked about a sales slowdown due to the presidential election.
- Experts say some shoppers are holding back until after November 5 — but not everyone.
- A particularly close election that takes weeks to decide could weigh on consumers.
Companies are bracing for people to shop, travel, and drink less around Election Day.
Executives at some major brands have said on earnings calls in recent weeks that they expect their financial results to take a hit around the time voters will decide between Vice President Kamala Harris and former President Donald Trump. They range from Constellation Brands, the maker of Modelo, which expects fewer people to go out drinking around the election, to airlines like United and Delta, which often see passenger counts dip around Election Day.
Some companies already have seen political news distract customers. When a gunman died after injuring Trump at a rally in Butler, Pennsylvania in July, for instance, Amazon saw some people put off making purchases on the website, CFO Brian Olsavsky said in August.
“A lot of times, purchases will defer and people will come back and buy what they were going to buy,” Olsavsky said on a call with reporters. “And other times — that won’t happen.”
Other companies have invoked the election but not provided details about the dynamics leading consumers to pull back. Anna Manz, CFO of Nestlé, said on the company’s earnings call last week that it’s facing a slowdown in the US and “concerns around the elections are playing out.” Nestlé did not immediately respond to a request for more details from Business Insider.
Research suggests that some consumers — though not all — do indeed reduce purchases around the event.
Some shoppers are holding off on making purchases until after November 5, according to a September survey of 400 Kroger shoppers by 84.51, the grocer’s marketing subsidiary. Eighteen percent of those surveyed said they were holding off on buying big-ticket items such as electronics or appliances. Slightly smaller percentages said they were holding off on an investment decision or buying a car.
Consumers might be holding off on big purchases because they need loans and hope that interest rates will fall more in the months after the election, said Alex Trott, director of insights at 84.51. But some might not actually care as much about the election as the seasonal promotions that tend to follow in November and December, she added. “We are also bumping up against a holiday season where there are always sales,” Trott said.
People under 34 were also more likely than older consumers to put off a major financial commitment until after the election, 84.51 found.
Older consumers, such as Baby Boomers and members of Gen X, “can make some of these bigger decisions,” said Trott. “Younger people don’t have that spending power. They are sensitive to these smaller price changes.”
Most people — 53%, according to 84.51 — said they weren’t delaying any big purchases as a result.
This US election is taking place after years of inflation have squeezed consumers. The economy is a top concern, voters told BI this week. Deutsche Bank said inflation will remain stickier than expected.
Many companies are also forecasting that demand will return after either Trump or Harris wins the election. Modelo maker Constellation, for instance, said it expects beer demand to pick up again.
Ron Hill, a professor at American University’s Kogod School of Business, said consumers’ retreat could last longer if determining who won takes weeks.
Polls show that the race between Trump and Harris is close to a toss-up just over a week ahead of Election Day. If the race comes down to a single evenly divided state, as it did in 2000, when it took five weeks beyond election day to determine that George W. Bush had won the White House, shoppers might spend more time focused on that news and less time making discretionary purchases, Hill said.
“That’s going to be hell to pay” if that happens, he said.