Election Year Impact on U.S. Economy and Propane Marketers

Consumer anxiety and uncertainty related to the election are real factors that impact our economy. Historically, business in general tends to slow down during election years and research has shown that a slow-down in capital expenditures is common.  Businesses don’t like to make big investments during uncertain times.  After the election is over, consumers get back to normal spending patterns and pent-up demand can result in above average sales.

Elections Bad for Economy

Historically, election years have proven bad for the economy.

Markets tend to fall in the last year of a president’s second term.  Since 1900, the S&P 500 has, on average, fallen by 1.2 percent in year eight, with the market rising only 44 percent of the time.

Source: Why markets tend to fall during a presidential election year”

The U.S. economy has flashed mix signals this year, but hiring slowed sharply in May.  The slowdown came as businesses were growing increasingly uneasy about the outcome of the presidential election, and the wider uncertainty about the policies advanced by the next occupant of the White House.

America’s economy only grew 1% in the first half of the year, well below the historic average of over 3%. A lot of that sluggish growth is blamed on companies holding back on big purchases because of the energy sector slump…

Source:  “Is the U.S. election killing the economy?”

Retailers Concerned but Optimistic

A recent survey of retailers seemed to reinforce the notion that consumer uncertainty has been affecting spending.

In a National Retail Federation poll conducted prior to the election, more than 25% of consumers said the election would affect their spending. What’s more, 43% said they were being more cautious with their spending because of uncertainty around the election season.

Source:  “Why the Election Is Bad News for Retailers”

However, the NRF and the largest retailers are predicting a quick recovery and believe consumers will rally now that the election is behind us.  If the stock market is any indication, then these optimistic forecasts may indeed be correct.  Since the election on November 8th, the Dow Jones Industrial Average has risen over 550 points, a 3% increase in just over a week’s time.

Near-Term Predictions for Propane Marketers

Lower oil prices will continue to impact the U.S. economy and growth in the energy sector well into 2017. Consumers are enjoying lower prices at the pump, cheaper food and other raw materials, but if commodity prices continue falling, the resulting deflation can act as a damper on growth.  For propane marketers, lower fuel costs should continue to keep delivery costs down for at least the next six months to a year.

Propane prices have started the winter heating season at levels similar to last winter’s levels.  Although prices can vary significantly by region, on average propane retailers will enjoy a $0.30-0.70 per gallon margin this year.  An additional $0.25 per gallon margin will be achieved by those that either added bulk storage or had additional storage capacity that was used to buy gas at summer-fill rates.

For propane marketers looking to grow, the end of 2016 and beginning of 2017 will present good buying opportunities for bulk storage vessels, bobtails and transports.  Slower summer sales in the bulk storage market have resulted in higher than normal inventory and lower pricing.  As with other aspects of the economy, the post-election storage market is expected to recover so available inventory and current pricing is not expected to last.

Other factors that should influence propane businesses this year include the improving housing market and the weather.  The National Association of Realtors is predicting sizable increases in home sales and an uptick in new home construction.  And winter temperatures are expected to be colder than last year, based on the National Oceanic and Atmospheric Administration’s outlook for winter weather.



  1. John,

    Great article, it sounds like we should see consumer growth now that we will have a new President. What is Trumps position on gas/oil/ coal exploration in the US?


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