Letter from America – USA 2016 Election & Retail.
By Neil Saunders, Managing Director, Conlumino USA
10 November 2016
This is an extract from a whitepaper on the impact on retail of the USA election, which includes consumer research undertaken on 9th November 2016
The good news for retailers is that while the Trump victory has polarized opinions, it does not seem to have impacted on US consumers’ holiday spending plans. This is logical inasmuch as no policy changes will take place over the remainder of this year, so there will be no immediate impact on household finances or the economy in general.
Longer term views for household finances have shifted as a consequence of the election. The number of consumers who feel more positive has the slight edge over those who are less optimistic, but the majority is a slim one and many consumers expect some form of change.
Generally, the policy outlook for retailers is mixed with tax policies being favorable but trade policies looking more problematic. This leads us to believe that over the medium term retail will find domestic demand slightly stronger, but will also face higher costs from a less favorable trade and labor policy. While some costs may be passed on, it is likely some will be absorbed. This raises the prospects of lower margins, although these will be tempered by a much more favorable tax regime.
All of this noted, with consumers still digesting the consequence of a Trump win and with the possibility of the President-elect solidifying and clarifying some of his initial policy ideas, the situation could well change in the coming weeks.
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