Halloween Economic Stimulus

October 30, 2011

The President, Congress and the Federal Reserve are all debating their next economic stimulus plan in their continuing effort to get the economy moving again.

This will be the third round of fiscal stimulus packages by Congress and the President.

As for the Federal Reserve, they seem to have their monetary stimulus, named QE3 to indicate that it is the third round of Quantitative Easing which involves pumping more money into the banking system after their two previous massive injections of money failed so far to do the trick.

Without waiting for their respective governments to again pump billions of dollars willy nilly into their economies, American and Canadian consumers are stepping forward and releasing in excess of $6.2 Billion into the U.S. economy and close to $2 Billion into the Canadian economy.

These are not higher taxes being sent to Washington and Ottawa, although more tax dollars will be flowing to two capitals as a result of these actions.

No, this stimulus represents retail consumer spending on candy, costumes, decorations and other activities associated with the celebration of Halloween.

In case you haven’t noticed, the celebration of Halloween in recent years has become increasingly more elaborate - and expensive

Here are some examples that illustrate the magnitude of Halloween generated consumer spending:

• In 2009, despite the deep economic recession, American consumers spent a total of $5.8 Billion on Halloween candy and other items and activities associated with the celebration of Halloween.
• This was up from the $4.96 Billion spent in pre-recession 2006.

• According to Canadian retail statistics, Canadians spent $1.15 Billion in 2006 and trends indicate that this number has been increasing each year since.

• While $1.5 Billion worth of 2006 Halloween sales in Canada is only about one-third that of the 2006 sales in the United States, you have to remember that Canada’s population of about 34,501,798 people according to 2011 estimates is about 11% of the 312,527,000 people living in the United States according to 2011 estimates.

• Thus, with a population that is about 11% of the U.S. population, Canadians are spending about 30% as much as the U.S. on Halloween candy, costumes, decorations and other expenses associated with the celebration of Halloween. And these sales are increasing each year.

• A 2006 survey by the National Retail Federation showed that 63.8% of Americans surveyed planned to celebrate Halloween (and make associated purchases) in 2006 and this was up from 2005 when only 52.5% claimed to have celebrated Halloween.

• For Canadians a 2007 survey by the Retail Council of Canada indicated that 68% of Canadians participated in Halloween consumption and indications are that, like the United States, that percentage is increasing.

• A September 15, 2011 article in the Ottawa Sun by Stefania Moretti quoted surveys showing estimates of U.S. consumer spending on Halloween in 2010 reaching $6.2 Billion.

• For Canadians, the same article cited surveys indicating that the average Canadian would spend $300 on candy, costumes, decorations and other Halloween purchases in 2011 (NOTE: as of this writing the U.S. and Canadian dollars have the same value as there is little or no exchange rate difference between the two currencies).

• The same Ottawa Sun article cited above added that, on average, pet owners in Canada can be expected to pay an additional $59 each for costumes, treats and other pet related Halloween items for their pets. I assume that these figures are close to average Halloween consumer spending in the United States as well.

In terms of economic impact, Halloween is beginning to produce a noticeable increase in retail sales and seasonal employment.

This increase in retail demand and seasonal hiring in turn increases demand for more production, shipping and other services which also result in additional increased employment and consumer spending.

This increased economic activity resulting from Halloween celebrations won’t pull the economy out of the recession or get it back on a growth track which will put the unemployed back to work.

However, just as the Christmas season is expected to give a boost to economic activity and employment, this Halloween boost in economic activity will help to lessen the hardship and misery of the recession.

Also, the Halloween festivities, like the Christmas season festivities, will provide people with a good time.