Pre-election spending splutter mostly a myth

The idea that households and businesses postpone their spending ahead of a Federal election is more fallacy than fact. Admittedly, there is some evidence that the uncertainty generated by an election leads businesses to reduce their investment expectations. But there is less evidence that it reduces actual investment. If anything, the data suggest that the confidence and spending of households actually picks up ahead of an election. As such, we doubt that the probable election on 2nd July will have a big bearing on the performance of the economy this year.