When it comes to the consumer market in general — and the luxury market in particular –Â Romney emerges as candidate best for business
Over 30 years ago, Ronald Reagan ran a successful presidential campaign based in part on the question, â€œAre you better off nowÂ than you were four years ago?â€Â Twenty years ago, Bill Clinton did likewise with the no-nonsense campaign focus, â€œItâ€™s the economy, stupid.â€Â
Regardless of social issues or international conflicts that may be debated, elections often come down to economics, and this year, we are waiting to see which man â€“ Obama or Romney â€“ will convince the country of the wisdom of his economic plan.Â I believe luxury marketers should be crossing their fingers, hoping for a Romney victory.
Under President Obama, we have seen the country split in half as the president failed to deliver on a number of promises for his first term â€“ today, unemployment stands over two percentage points higher than his goal, and real median household income has dropped by 5 percent.Â We have reached the staggering point at which half the country pays taxes, and half donâ€™t, according to the Heritage Foundation.Â Whatâ€™s more shocking, nearly 110 million individuals â€“ one-third of all Americans Â â€“ are receiving some kind of federal welfare, according to statistics produced by the Senate Budget Committee Republican staff.Â Â And those 110 million welfare recipients donâ€™t even include those receiving Social Security or Medicare.
It is in this climate that President Obama made one of his most tone-deaf statements to date:Â â€œIf youâ€™ve got a business, you didnâ€™t build that.â€Â Pundits and politics-watchers have endlessly debated the context and the hand gestures and body language surrounding that statement, but one thing is clear.Â The presidentâ€™s attempt to laud governmentâ€™s role in business as the unsung creator of infrastructure was rightly heard by business owners to mean that government, not the individual, should get the credit for the worry, late nights, and financial risk it takes to build and run a business.
Into this questionable business climate comes Romney, whose personal experience in business is buttressed by the selection of Paul Ryan as his vice-presidential nominee.Â In the Romney/Ryan ticket, we see a definable plan for economic growth and control of governmental spending that is friendly to business and to affluent business owners.
This is not to say that Romney has not hit a few sour notes.Â His affluent lifestyle, which allows him the luxury of a garage with a car elevator and his wife to be deeply involved in the pricey hobby of dressage, seems to be at odds with a global trend away from conspicuous consumption.Â In Greece, owners of swimming pools are becoming targets for tax investigations, leading these affluents to camouflage their luxuries; in the U.S., we are seeing a milder form of this as affluents shy away from luxury goods with visible logos.Â The Romneys will need to find a way to mute their lifestyle if they are going to truly appeal to small business owners whose daily luxury runs more to a latte from Starbucks than a ride on a pedigreed horse.
Affluent consumers are waiting in state ofÂ ’suspended consumption’
Nonetheless, I believe the Romney/Ryan ticket is the best for business, and my research shows that affluent consumers are waiting for the election before they commit to greater spending or hunker down to weather a coming economic storm in a second Obama administration.Â In Unity Marketing’s proprietary Luxury Consumption Index (LCI), which consistently predicts shifts in GDP, we see affluent willingness to spend see-sawing up and down through the past few quarters, taking another dip in the most recent study.Â This combines with our most recent Luxury Tracking research, which shows luxury consumers cut back their level of luxury spending during the second quarter (April-June) by 8.2 percent from first quarter.Â The decline in spending was even more pronounced comparing year-over-year, down 26.9 percent.Â
I believe affluent consumers are in a state of â€œsuspended consumption,â€ waiting for the results of the election.Â An Obama victory will signal to these heavy lifters in the consumers economy that their work is not respected, and that both the government and the electorate is suspicious of their success.Â They will cut further back on luxury purchases in order to fly under the radar, not marking themselves as part of â€“ or a potential part of â€“ the one percent.
A Romney victory, on the other hand, will signal a greater governmental friendliness to businesses of all sizes and to the ultra-affluents and HENRYs that run and manage them.Â A Romney win will be better for business as a whole and for the luxury marketplace in particular.
Learn more about the luxury marketplace and the affluent consumers
There is little we can do to impact the results of the national election, but we can better understand the affluent consumer that buys luxury goods and services and respond when election results come in.Â
- Get the Overview:Â My latest book, Putting the Luxe Back in Luxury, details how consumersâ€™ values impact their buying decisions and vital data about the demographics of affluent consumers.
- Understand the Climate:Â Our latest Luxury Tracking Study covering the second quarter 2012 shows how consumer behavior is changing now, along with examining the LCI in depth and how it predicts future economic behavior.
- Â Take it to the Next Level:Â Need a customized marketing solution that will see you through the election and beyond?Â Contact me at email@example.com or 717-336-1600.