This week:
If you've been in the ecommerce game for a while, you have probably heard people mention "the pre-election slump," a period of time where consumers, allegedly stressed about the uncertainty of a presidential election, put away their wallets, causing a collective slump in consumer purchasing behavior. This would impact all DTC brands operating in democracies around the world. In fact, The New York Times is raving about this right now. So is it real?
Short answer: maybe? Let's get into it.
Evidence for the pre-election slump phenomenon seems widespread. This behavior feels outsized on big-ticket items, like houses, cars, weddings, and investments. The argument states that consumers, stressed by politics, hang onto their cash to prevent uncertainty.
The NYT reported this apparently trustworthy input from a car salesman: “Every four years this happens,” said Jerry Reynolds, a former car dealer and the host of the CarPro radio show. “It’s the uncertainty.”
Data on housing, wedding spending, and more seems to back this up. So yes, maybe you'll see people hold off on big ticket items in the short term.
But it gets more complicated: people are still spending. In September 2024, retail sales showed continued growth, more than economists expected. And other folks claim there's zero correlation between an election year and consumer spending.
So is the election slump real?
Only YOU can tell. This is one of those macroeconomic storms that only affect certain brands. As Bill Nye The Science Guy says, consider the following:
1. Do you sell a big-ticket item that is affected by "scarcity" or "uncertainty" psychology? In times of uncertainty, people sit on their cash. They purchase discount or off-brand. They hold off on large luxury purchases made in celebration or confidence. Consider how your brand is affected by this.
2. Do you sell a politically-charged or news-cycle-influenced product? Many of our customers see huge lifts (or drops) in their sales related to news cycles. Consider how the national disaster of back-to-back hurricanes may drive an increase in purchases of survivalist goods. Or the well-documented increase in google searches for "how to immigrate to Canada" that occurred after Donald Trump was elected in 2016. We are all slaves to "the vibe" - but to what degree is your business affected by it?
3. Are you advertising to audiences that are under pressure right now? Twelve billion dollars is entering the advertising space with two CTAs: donate (and) or vote for our candidate. It's hard to get a potential customer's attention when they're getting hammered like this. Advertising in a swing state? No chance, your potential customers are getting blasted. Advertising to in-demand demographics, like black and latino voters? They're caught in the middle of an intense battle for their attention - how can you compete with that?
Our final word: the "pre-election slump" only applies if you're a brand caught in the crossfire by any number of variables. The good news? We think there will be a boost in purchasing once the election's finally over.
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