DAA Daily

Market Predictions: How Valentine’s Day Affects the Economy

By Caelan Webster, Finance, The Pawprint

On February 14 of every year, Valentine’s Day is celebrated around the world. Heralded as a day to connect with others, many will purchase gifts for those they care for. With this influx of consumer purchases, it’s no wonder that the economy, and stock market’s as a whole, experience a substantial boost. But how large is the impact of Valentine’s Day? What are the statistics? And what can we expect this year?

Valentine’s Day is the fifth largest consumer spending event in the United States, right after the winter holidays and Mother’s day. Last year, consumers spent US $22.7 billion dollars on Valentine’s Day, and that number is expected to rise even more this year. On average, a single American spends around $175 dollars on Valentine’s day. Seeing that consumer spending makes up 70% of America’s total financial output, this massive amount of spending has a large impact on the economy. This year, analysts predict that U.S. citizens will spend anywhere from $23-25 billion dollars, an amount that could cause a large jump for both the economy and stock market. 

But how are Americans spending this money? Nationwide surveys give the statistics. 31% plan to spend most of their money on an “evening out” for Valentine’s day, 22% plan to purchase jewelry, 20% plan to buy clothing or gift cards, 40% will buy greeting cards, and a whopping 55% will purchase candy. With these being the main commodities, expect companies like Tiffany and Co. and Hallmark to have the largest stock increases. 

Oil also does well during Valentine’s day – people commute to loved ones and family, refilling on gas along the way. Air travel also increases, with most flights being fully booked during the days leading up to February 14. As such, large oil indexes like OPEC Bucket and Murban Crude have risen 3.04% and 2.45% respectively at the time of writing. 

The increase in consumer purchasing leads to large jumps in specific sectors of the market. But there’s an issue – overall, the market doesn’t see much of an increase during Valentine’s. Seeing that most workers get time off for the holiday, and people are less likely to purchase items like tech or automotives, the overall market stagnates. Companies like Tesla, Microsoft, and other blue chip companies experience small dips, leading to the overall market having an average decrease of 0.003%. 

In conclusion, Valentine’s day usually leads to a boost for the American economy, a fact that we can expect to pull through this year as well. Furthermore, the aforementioned sectors of the market usually see large boosts during this time, and could be a smart investment. Oil prices will also spike during this time. However, major indexes flatline, as market volatility and consumer spending patterns lead to decreases in other major sectors of the economy. Overall, investors should focus their attention on more specific companies, and not expect a large jump in most major indexes. 

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