The Grinch Threatening the Holiday Season – An Unresolved Election

In his master work on macroeconomics, How the Grinch Stole Christmas, Dr. Seuss describes how the Who’s of Whoville continued to find joy in their collective experience on Christmas Day even though the title character had made off with all the superficial holiday trappings the night before.

And, like the Grinch, born with a heart “two sizes too small” some market watchers tried to steal the joy from last week’s jobs report which offered up data that – while perhaps not a barn burner – had enough heat to warm the cockles of even the Grinchiest of economists.?

When a typically stoic outlet like the Economist runs a headline story in October hyping an economy that is the “envy of the world” any arguments about the state of the American economy ought to be pushed to the margins. Behind the dueling headlines debating whether 2.8% GDP growth is worth celebrating is a consistent acknowledgment that the economy has achieved the fabled soft landing with jobs, growth and inflation finding equilibrium.

At the core of this unexpected run of fortune is a resilient U.S. consumer who continues to spend, fueling a virtuous economic cycle bearing enough real good news and warm feelings to cause even the Grinch’s heart to grow twice its size.

Despite fluttering stomachs, most predictions of the 2024 holiday season peg spending growth at somewhere between 2.5% and 3.5% -- enough growth to ensure there will be “winners” when the retail earnings and consumer spend data slides down the media chimney next January. Unlike the Whos of Whoville on Christmas morning everyone won’t be joyfully singing. The Grinch will not return everyone’s toys. There will be losers and industry watchers will have their hands full picking apart lessons.

And a second Grinch has appeared on the horizon threatening to bring the economy to a screeching halt – the U.S. Presidential election. If the results remain unresolved or actively disputed by, say November 12, the U.S. consumer spending spree will end as a result of the confluence of underlying consumer sentiments revealed in the on-going Kearney Consumer Stress Index research.

First, almost two-thirds of respondents lack optimism about the U.S. political future. Second, roughly 50% felt unable to impactfully participate in the election process, and 40% found the political environment “very upsetting”. The longer the election results are in question, the more consumers will question the country’s future direction, and the more likely they are to turn inward and step back from celebratory consumption.

To stick with our Seussian metaphor, Whoville will become increasing silent as its residents run inside and lock their doors in fear of another Grinch attack.

With stockings stuffed (or supply chains fully loaded), what can retailers and brands do to prepare to fight off the Grinch?

1.?Encourage and enable your employees to vote. Early voting is at record levels providing some flexibility on election day. While more votes won’t automatically avoid a too close to call result, more participation will remove the doubt that might be created if citizens sit on the sideline and don’t bring action to their voice.

2.?Create community action. Current growth projections suggest winners and losers. Rather than a tide that raises all boats, an electoral stalemate will be the rough waters that crash us all. Partnering can create an environment that assuages those consumer concerns and positions retail as an escape from the slog of a dragged-out election. Consultants and other third-parties have a track record of being honest brokers to facilitate such outcomes.

3.?Conduct “what-if” analysis. Frequently, scenario planning is viewed as a long-term exercise focused on a blurry, distant future, but leading consumer goods companies have used scenario modeling to forecast a quarter or two ahead. A table-top scenario exercise can reveal opportunities and options allowing companies to be pre-positioned to move to action real-time.

4.?Support your teams. In the end, we are all consumers. Whatever angst we tag as “consumer stress” or “consumer sentiment” is merely a reflection of what your internal teams are feeling. Any holiday spending paralysis will be reflected in the people we pass in the halls or digital meeting rooms.

Dr. Seuss wrote that the Grinch was thwarted by the joy and solidarity of Whoville. Unlike the storybook, if the Grinch appears this season, he will be followed by serious and divisive debate, not a joyful sing-along, so branders need solid plans in case the election remains unresolved into December.

Happy Voting.?