Listening to NPR the other day there was a passing comment regarding the relationship of the US economy to consumer confidence – about 2/3 of the US economy is directly connected to consumer spending. Not news in itself but with confidence in Bush at an all time low what could be the potential economic impact of Obama just winning the election. Some of the data is pretty surprising.
According to recent survey by the International Council of Shopping Centers and Goldman Sachs, 8% of respondents said they are likely to increase holiday spending because of the election of Sen. Obama. Although it does not say how much the spending is likely to improve, a little back-of-the-napkin math can help put this into perspective.
In the 2007 there was about $70b in holiday spending and according to Mastercard about 40% ($28b) was spent online. If 8% of people spent just 5% more that translates into an additional $280m. If it is more like 8% of people spending 25% more the number jumps to $1.4b, or an overall increase of 2%.
Another survey by the National Retail Federation projects that 2008 holiday spending will increase 1.9 percent over 2007 spending. In a nutshell, Obama could provide a lift in Holiday shopping that could double the expected growth in 2008 spending.
Even more impressive is the overall potential impact on the US and the global economy. Gallup daily tracking poll of consumer confidence in the US has shown a 9 point drop (80 to 71) in the people who view the economic outlook as “negative” just over the last week. Not significant? The negative score has not been at 71 since February.
Maybe the best economic stimulus was just passed by the American voter?— 2008, Chris Dornfeld, President & CEO, Dornfeld Management Group