In: Economics
Halloween is just around the corner, but it will be hard for the
kids to go out for trick-or-treats or adults to go for Halloween
night party because of the COVID-19 pandemic. According to the
National Retail Federation (NRF) is U.S., in 2019, Americans
planned to spend a near-record $8.8 billion on Halloween, the third
most expensive Halloween postrecession.
a) What can you expect about the Halloween expenditures this year?
Will it go up or down or remain the same? Why?
b) What other concepts from economics you can apply to Halloween?
State and briefly explain all.
Because of the ongoing Covid-19 pandemic, the expenditure for Halloween in 2020 will likely decrease by 10% in the United States since people are expected not to spend as much as usual this year with rising unemployment rates and lowered incomes for many people.
It could also be argued that the state of the economy affects
the Halloween industry more than Halloween affects the state of the
economy. In a down economy, for instance, consumers may be less
likely to spend on frivolous goods such as costumes, candy,
pumpkins, and home decorations.Conversely, booming economic times
might serve as a boon to Halloween expenditures. Regardless of
which way the relationship goes, many economists believe the
increase in spending has a positive effect on the economy.
Increased spending generally leads to higher gross domestic product
(GDP), helping to jump-start economic activity and lead to
potential job growth.It is entirely possible, however, that the net
positive effects of Halloween consumer spending are offset by net
negative effects elsewhere. For example, some consumers might
anticipate an increase in spending around late October and, to
compensate, increase their savings during the preceding months.
This tends to reduce gross spending during August and September.
Others might curb their spending in November, both to compensate
for increased spending for Halloween and also in expectation of
Christmas spending.
Halloween also has a seasonal impact on employment and commercial
activity. The NRF expects that nearly seven in 10 consumers will
celebrate the holiday this year, each spending an average of about
$86 on costumes and candy. Many retail stores open up only for
Halloween and, when November arrives, these shops close up and wait
patiently for the next season. Some industries expect and plan for
large increases during the holiday, including pumpkin growers and
candy production companies.
Some economists argue spending on seasonal consumer goods such as
costumes and decorations diverts resources from more productive
activities because they are only used for one day of the year. If
people save less as a result of holiday spending, the total capital
investment stock is worse for it. The receipts of companies that
employ people full-time year-round may also drop because more
dollars are chasing seasonal goods.Others have argued Halloween is
full of in-kind payments, such as costumes or candy, rather than
lump-sum transfers, such as cash, and that in-kind payments are
more inefficient in satisfying consumer wants. After all, you can
buy whatever you really value most with cash, whereas it is
unlikely that your candy bar is your most valued good. Economist
Jeffrey A. Tucker argued in his 2009 article for the Ludwig von
Mises Institute that Halloween teaches valuable economic lessons
that could have very long-term benefits: children should work for
their rewards, bartering is an option, and appearance matters. But
the most accurate answer is probably this one: Halloween is a
substantial industry with a significant impact on the U.S.
economy.