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Campaign Advertising Provides Small But Significant Stimulus

Long before Donald Trump arrives in Washington, beginning his tenure as the 45th president of the United States, Trump has already unknowingly made strides to influence a large sector of the US economy. Through the last minute push that saturated airwaves with advertisements criticizing his opponent, Trump made a small but significant impact on the US GDP without even taking office.

Trump, his opponent Hillary Clinton, and the countless other local and national candidates, spent over 4.4 billion in advertising this campaign cycle, a half a billion-dollar increase from 2012. Campaign contributions, including those to advertising, are steadily increasing due in part to the Citizens United decision that allowed corporations to contribute as private citizens.

“The uniqueness of this year’s election and a political landscape that has become more competitive, forces people to spend,” Professor of Political Economy at George Mason University Thomas Stratmann said.

This money, according to the Bureau of Economic analysis, will have half percent impact on GDP in 2016. While this is not a significant stimulus, the large contributions made by PACs and campaigns provide a positive impact on GDP and especially the communications industry.

For Stratmann another way to measure advertising’s impact on growth is to measure the number of positions added by trade associations, consulting, and communications firms tied to the advertising industry.

“The money spent on advertising this election really just helps TV stations and those who are in communications, when you’re looking outside that industry it’s really just a drop in the bucket,” Stratmann said.

The increase GDP Growth through just advertising does not come without consequences, according to the Federal Communications Commission. During election years, small businesses are limited when it comes to airtime by increased prices due to competition with multiple campaigns. Stratmann also noted a majority of that 4.4 billion does not move to other sectors of the economy, but rather benefits major networks.

“Specialized advertising agencies such as those firms that robocall are making a majority of their profits during election years. T.V. stations and cable networks really just replace the advertising they have in a non-election year creating higher prices that exclude local campaigns and small businesses,” Stratmann said.

It is yet to be seen, how Donald Trump impacts the economy in the next four years, but the money that his campaign has already pumped into the economy is already at work. The increasing amounts of political spending on every election cycle influence the economy both positively and negatively, even before a candidate takes office.

 

(Trump Tower, Chicago, IL. Credit: Daniel Huizinga.)

(image courtesy of: http://en.alalam.ir/news/1776355)

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