For Retailers, Joy in a ‘Blue’ Christmas in 2013?

It’s that magic time of year when people gather and celebrate – and spend. And as market analysts and store managers wonder about what the season will bring, a big part of their answer may lie where their stores and consumers are based.

Economics is often as much about psychology and attitudes (what people expect) as it is about reality (what’s in people’s bank accounts). And behind consumers’ attitudes is a complex mix of behaviors and beliefs that is tied closely to the makeup of those consumers’ communities, according to a data analysis from the American Communities Project.

Using data from Experian Marketing Services, a consumer research firm, the ACP examined how people in each of our 15 county types feel about their economic future going forward. Many of the numbers were counter-intuitive and suggest that a community’s economic attitude may be more closely tied to its politics than its wealth.

And in political terms, a “blue Christmas” may not be such a bad thing for retailers. People in communities that lean Democratic tend to have more positive view of their economic futures.

There are some sharp economic income divides in the ACP. Near the top are the Exurbs (in yellow on the above map) that usually sit on the outskirts of urban areas and have a median household income of more than $63,000 a year. At the bottom of the list are the counties that make up the African American South (in greenish-yellow), with a median household income of about $35,500.

And yet when Experian asked people in those communities if they would be better or worse off in the next 12 months, the numbers looked reversed.

County Type

Income

Total “Better Off”

Total “Worse Off”

Exurbs

$63,290

34%

16.7%

Af-American South

$35,561

37%

15.1%

By standard economic measures, those numbers don’t make a lot of sense. The economic divide between these two types isn’t likely to change – it goes back many years. But this is where politics enters the picture.

Those Exurbs voted heavily for Republican Mitt Romney last year, 57% for Mr. Romney to 38% for President Barack Obama. Meanwhile, in the African American South it was Mr. Obama who won – 50% to 48% for Mr. Romney. That’s a close margin, but those counties hold a high percentage of Mr. Obama’s most loyal supporters, African Americans, which make up 40% of their overall population.

In other words, the numbers suggest that the politics of these places is having a real effect on how people perceive their personal economic situations.

The economic optimism in the African American South is even more pronounced when you compare it against other types in the ACP that share similar low-income numbers. The Evangelical Hubs (in light purple on the map above) and the Working Class Country counties (in dark blue) look more like the African American South in terms of median household income, both under $40,000, but looking ahead to the “next 12 months,” using Experian’s question, they are far more dour.

County Type

Income

Total “Better Off”

Total “Worse Off”

Evangelical Hubs

$39, 044

30.7%

18.7%

Working Class Ctry

$38,387

28.6%

18.9%

Af American South

$35,561

37%

15.1%

What do the Evangelical Hubs and Working Class Country counties share? A strong dislike for Mr. Obama. Mr. Romney won both types by big margins in 2012 – 59% to 38% in the Evangelical Hubs and 56% to 40% in Working Class Country.

In fact, this is largely true across the board comparing the 2012 presidential vote in the 15 ACP county types and the concerns they have about their economic futures.

In total, five of the 15 county types voted for Mr. Obama in 2012 and in all of them more than 34% say they expect their economic situations to improve in the next year. In most of the types that voted for Mr. Romney, six of 10, fewer than a third say they expect their economic situation to improve over the next year.

What does that mean? From the psychological perspective it may mean that counties that voted for Mr. Romney could be less apt to spend this holiday season – if they are being honest about their concerns and spending accordingly.

And it may not just be about sour grapes. People in those communities don’t like Mr. Obama’s policies and may assume they will have an adverse effect on them. Whether or not they really will. That’s something I discussed in my Politics Counts column this week for the Wall Street Journal.

The effects of those feelings could be very different in different places. In the Exurbs, for instance, the 34% positive outlook on personal finance coupled with relatively high incomes means those places may still see good holiday receipts. But in places like the Evangelical Hubs and Working Class Country counties, where incomes are already low, the affects could be harsher.

The ACP actually has a way to examine at least some of these possibilities when the holidays are over. Working with Experian we have also assembled a list of stores the people in each of our 15 communities tends to favor.

So if receipts look good this December at the Golden Corral restaurants based in African American South counties, we may surmise people in those places acted on their positive feelings. If receipts are down at the Shoney’s based in those Evangelical Hubs, we may infer that people in those places were concerned enough about their future finances to cut back on the Tater Chips.

But the larger point is that the divided nature of American politics is more than just a difference of opinion or belief. People who dislike Mr. Obama are more likely to feel dour about the year ahead and, for a variety of reasons, are more likely to live near people who share their political (and economic) views. And those views may impact their local economies. And the opposite is true of those who support Mr. Obama and their communities.

In other words, the nation’s partisan split has become so embedded in the psychology of Americans that it may actually have the power to impact the realities of the ACP’s communities. The connection between what people expect economically and what’s in their bank accounts may flow directly from what they do at the ballot box.

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