As the economy recovers, Republicans and Democrats will play different roles

As the economy recovers, Republicans and Democrats will play different roles
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The COVID-19 pandemic has impacted American life in unprecedented ways. Yet all pandemics eventually come to an end, and so too will this one. When the economy begins to rebound it will rely on pent-up consumer demand to drive the recovery.

So, are consumers ready to spend? Who will spend more than normal, and on what?

Data collected from a nationwide sample of 1,151 Americans during early May 2020 paint a fascinating picture — and reveal that partisanship helps explain both how consumers are feeling during the pandemic and how they plan to behave after it.

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The data illustrate the difficult realities confronting most Americans: About 95 percent of respondents were under lockdown at the time of surveying. Some 16 percent had been laid-off, furloughed, or were unemployed. Nearly 42 percent said their income has decreased since the pandemic began. About 78 percent are currently working from home, compared to 37 percent before the pandemic.

However, consumers’ emotional response to the adversity differs greatly between political parties. Republicans express greater anxiety, stress, and powerlessness than Democrats. For example, 38 percent of Republicans reported being either “quite a bit” or “extremely” anxious, compared to 29 percent of Democrats; 41 percent of Republicans reported being either “quite a bit” or “extremely” stressed, compared to 32 percent of Democrats, and 37 percent of Republicans reported feeling either “quite a bit” or “extremely” powerless, compared to 28 percent of Democrats.

Although Republicans are more negatively impacted emotionally by the pandemic, they also express greater positivity about the future. While 34 percent of Democrats reported being either “quite a bit” or “extremely” hopeful, this leapt to 49 percent among Republicans. Only 40 percent of Democrats reported being either “quite a bit” or “extremely” optimistic, compared to 50 percent of Republicans. These differences are all statistically significant.

Will these varying emotional responses to the pandemic across partisan groups translate to different shopping behaviors? Are Democrats and Republicans likely to exhibit “politicized consumerism?”

You bet.

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We first asked the respondents what they would spend $1,000 on if they received it unexpectedly. Democrats indicated they would spend just over half ($514) on savings or on paying debts and bills. Republicans, on the other hand, reported they would spend almost two thirds ($613) on purchasing and various outlays.

Republicans, in short, may represent a bigger share of the consumer dollars flowing into the economy by purchasing goods, rather than saving and paying down debt. This greater desire to consume things may be driven by the greater stress, anxiety, and powerlessness Republicans are experiencing.

We also asked each respondent the first thing they would buy or do when the pandemic begins to slow or comes to an end. While the responses were open-ended — and thus varied widely — the two most common goods mentioned by Democrats were restaurant and vacation. By contrast, the two most common goods mentioned by Republicans were food and clothes.

Democrats, it seems, may be more interested in experiences post-pandemic, while Republicans are more focused on everyday purchases. More detailed data confirms this assumption.

Perhaps because of the high anxiety and stress Republicans are experiencing, they appear eager to spend more than Democrats on necessities such as household items (39 percent vs. 29 percent), health and personal care items (36 percent vs. 23 percent), food to consume at home (39 percent vs. 30 percent), and utilities (32 percent vs. 21 percent). 

In addition, and again probably as a coping mechanism to ease their emotional turmoil, Republicans (44 percent) are more eager than Democrats (28 percent) to spend on luxury goods like jewelry and electronics after the pandemic as well as on telecommunications such as cable TV and streaming services (33 percent vs. 21 percent).

In a rare show of unity, Democrats and Republicans expect to spend at roughly equal levels (“somewhat more” or “much more”) on restaurants and bars, clothing and apparel, travel and leisure, and entertainment and events (concerts, sports events). So, politicized consumerism will be more active in some consumer industries, such as health and personal care items, than in others, such as showing support for local restaurants and bars.

As we look toward the post-pandemic economic recovery, it will be important to track not only how quickly it happens, but also which consumers are driving it. Understanding which consumers are most likely to spend, and on what, will help companies serve these customers. It will also help policymakers forecast the recovery’s trajectory.

Our data show that consumer spending will be unequally distributed across partisan lines, and that Republicans may contribute a larger share of this spending. Democrats, on the other hand, may be quicker to get on airplanes for vacations and to flock to restaurants. 

Ayalla A. Ruvio, PhD, is Associate Professor of Marketing in the Broad College of Business at Michigan State University.

Forrest V. Morgeson III, PhD, is Director of Research for the American Customer Satisfaction Index (ACSI) and Assistant Professor of Marketing in the Broad College of Business at Michigan State University. 

G.Tomas M. Hult, PhD, is Professor and Byington Endowed Chair in the Broad College of Business at Michigan State University and a member of the Expert Networks of the World Economic Forum and United Nations’ World Investment Forum.