Election Cycles and Business in Washington D.C. with Steve Salis

Running a business in Washington, D.C., often described as the "backyard" or "front yard" of the United States, presents unique challenges and opportunities during election seasons. As the seat of the federal government, the District of Columbia is deeply intertwined with political dynamics, making its marketplace particularly sensitive to the ebbs and flows of the electoral cycle. This is especially true in the current election cycle, which has remained highly unpredictable. With Vice President Kamala Harris securing the Democratic nomination following President Joe Biden’s decision not to seek re-election and former President Donald Trump continuing to lead the Republican field despite ongoing legal battles, uncertainty is high. Businesses are closely monitoring these developments as they navigate the evolving political and economic landscape.

Steve Salis, a highly prolific businessman based out of Washington D.C., has plenty of experience navigating market volatility during an election year. Since Salis moved to Washington D.C. in 2011 and founded the popular DC-based pizza brand &pizza as well as other consumer businesses such as Ted’s Bulletin and Kramerbooks, to name a few, Salis has witnessed three and soon to be four different election cycles, with this one setting up to be a tight race to the end.

The Impact of Elections on the Marketplace

Elections, particularly presidential ones, have a pronounced impact on business and consumer behavior in the DMV (District of Columbia, Maryland, and Virginia) area. The presence of a significant number of government workers, contractors, and lobbyists means that political uncertainty can lead to noticeable shifts in economic activity. 

“While I don’t generally like to comment on political matters, this particular election cycle is unique as the incumbent will obviously not be elected as he recently dropped out of the race in favor of the Vice President. As a result, those currently working for this administration, I believe, are determining whether they are going to continue to be employed with the new administration going forward or if they need to seek opportunities elsewhere. I believe this leads to uncertainty, which can correlate to a pullback in discretionary spending.”

Consumer Spending and Government Workers

Government employees make up a substantial portion of the workforce in the DMV. During election periods, especially when an incumbent may lose — or in this case, is not running — there is often uncertainty about job security. This uncertainty can result in a tightening of wallets, as government workers and those in adjacent industries become cautious about discretionary spending. 

A change in administration, even within the same party, can bring about policy shifts that directly affect federal employment. For instance, new policies on budget cuts, restructuring, or shifting priorities can lead to job losses or changes in job security, prompting government workers to be more conservative with their spending. This ripple effect impacts local businesses, from restaurants and retail stores to real estate and entertainment venues.

“A changing of the guard can definitely lead to uncertainty in the business world. Especially now more than ever as it seems that the Democrats and Republicans are evolving their traditional party positions and views. This could create additional instability in the business community as it could be increasingly difficult to predict what the policies may remain or change.”

Business Investments and Market Uncertainty

Businesses operating in D.C. also face challenges during election cycles. The uncertainty of political outcomes can lead to a pause in investments and expansion plans. Companies may adopt a wait-and-see approach, delaying major decisions until the political landscape becomes clearer. This hesitation can slow down economic growth and affect the overall business climate.

Moreover, businesses that rely on government contracts may experience delays or disruptions. Changes in administration often come with shifts in policy and priorities, which can result in the renegotiation or cancellation of contracts. This uncertainty can be particularly challenging for small and medium-sized enterprises (SMEs) that depend heavily on government work.

“The capital markets will need more visibility into interest rates and tightening ‘bid ask spreads’ for mergers, acquisitions, and in general, business transactions to pick back up.”

Historical Perspectives on Electoral Impact

Historically, election cycles have shown a consistent pattern of impacting the DMV's economic activities. For instance, during the 2016 presidential election, there was a noticeable dip in consumer confidence among government workers, leading to reduced spending in the months leading up to and following the election. Similarly, the 2008 financial crisis, coinciding with the presidential election, saw significant economic fluctuations that affected local businesses in the DMV area.

Mitigating Uncertainty: Strategies for Businesses

Despite the inherent uncertainties, there are strategies that businesses in D.C. can employ to navigate the electoral cycle:

“It's important to stay true to your business and brand, making prudent decisions when it comes to election cycles. Now more than ever, I believe businesses need to lean into what makes them special. They should do their best not to fall to short term temptations to drive business and traffic that may create long term implications. These are the times we need to be reminded that business is cyclical. The good times will come back.”

Conclusion

Running a business in Washington, D.C., requires a keen awareness of the political landscape and its potential impacts on the marketplace. While election cycles bring uncertainty, they also present opportunities for businesses that are adaptable and well-prepared. By understanding the historical patterns and adopting strategic measures, businesses can navigate the electoral tides and continue to thrive in the nation's capital.

This post was authored by an external contributor and does not represent the opinions of “Stocktwits” and has not been edited for content.  The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice. “Stocktwits”  does not make any recommendation to buy or sell any security or any representation about the financial condition of any company.