Research shows we ‘wine and dine’ less before an election

HAVE you been wining and dining less recently? There may be a simple explanation for it.

There may be a simple explanation for why you’re eating out less. Picture: Jonathan Ng

WE GET the consumer jitters in the months before election day and take a drastic precaution: we cut back on wining and dining.

This is one of the economic consequences of an election campaign revealed in a new study into how the uncertainty of a national vote affect our spending and investment decisions.

The slump in dining out was the strongest evidence that elections influence consumer spending, according to the study by James Melville of CBRE Research.

We look forward to an election which flips government.

“Consumer sentiment tends to be at a higher level in elections involving a change in government,” Mr Melville said.

“In the 1996, 2007, and 2013 elections, consumer sentiment was recorded at above 110 (on a base of 100) in the month of the election ... whereas outside of government-changing elections consumer sentiment was typically below 105.”

But there is one area of private spending — arguably the most discretionary — where our confidence slumps.

In the six months before an election we spend less than average on food and beverages — including restaurants, drinks, fast food — and after polling day that drops off even further.

There is a surge in spending on clothing before an election — significantly above average — but we are dressed up not wanting to go anywhere.

And the clothing binge fades soon after the polls close.

By comparison two areas where spending is less discretionary, food and household goods — we have little choice because they are essentials — stay at relatively stable levels.

The research found elections cause “a slight drop” in dwelling investment, and “some short-term impact” on food and beverage turnover, while there is “resilience” in construction activity.

In short, any election effect on business is short-term.

But there is one standout area.

“In the could of months prior to an election there appears to be stagnation in the growth of (food and beverage) trade, a more substantial drop afterwards, then followed by a recovery,” Mr Melville said.

So what might be the economic impact of this election?

“The 2016 election involves tight polling results with a change of government not entirely out of the question,” Mr Melville said in his report.

“Under these circumstances, it is possible that the impact of the election result will be larger than usual.

“In the event of a ‘surprise’ Labor victory there may be a post-election sentiment shift as consumers and businesses adapt to a new government and policies.”