Based on the Keynesian school of economic thought, major spending holidays can have significant short-term benefits for the economy by encouraging extra purchases that might not otherwise occur. According to the National Retail Federation (NRF), in 2018 Americans planned to spend a record $9 billion on Halloween, the second most expensive Halloween post-recession.
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.
Employment and Commercial Activity
Halloween also has a seasonal impact on employment and commercial activity. The NRF expects that seven in 10 consumers will celebrate the holidays this year, each spending an average of about $90 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.
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, because 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. For now, it is still very difficult to identify exactly what that impact is and whether it is a net positive.