Early Presidential Contests: Big Exposure, Not Much Money

Early primary states get great media exposure, but not much in terms of dollars.

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Every four years, hundreds of politicians and journalists flock to Iowa, New Hampshire and South Carolina to cover the early contests in the Republican and Democratic presidential primaries. Hotels are booked, coffee is bought, and after it's over, drinks are often consumed. The early primary dates are important enough to most states that they'll fight—often bitterly—to keep their status. But how much are they really worth to the local economy?

Less than most people assume, actually. The early states relish their opportunity to be the center of the media and political universe, at least for a few weeks. But in terms of dollars and cents, the Iowa, New Hampshire and South Carolina contests only bring in modest amounts of money into the state.

"The exposure the state gets, I think that has great value to the state commercially, as well as politically, but the tangible economic impact of the Iowa Caucuses is meager," says David Swenson, a professor of economics at Iowa State University who has done research on how many jobs are created by the annual contests.

Despite the parade of cable television stars and hand-shaking candidates braving the brisk Iowa winter, the economic impact of the 2008 campaign—which featured two party contests—was worth about $25 million to Des Moines. The Greater Des Moines Partnership, an Iowa business group, says that's roughly the same amount as the Principal Charity Classic, an annual golf tournament held in West Des Moines. A 2000 study by the University of New Hampshire estimated that the New Hampshire primary's total impact, including indirect economic benefits, was $264 million—a little bit more than the state's annual Laconia Motorcycle Race Week. [Vote: Can Rick Santorum Win the 2012 GOP Nomination?]

"We're not even talking about the impact of a football game in one of our towns," says Otis Rawl, president of the South Carolina Chamber of Commerce, regarding the South Carolina primary, which typically follows Iowa and New Hampshire.

Estimates vary wildly, based on who's doing the counting. But even the most optimistic calculators tend to view it as a relatively small amount. The Greater Des Moines Convention and Visitors Bureau estimates that in total, the caucus brings in about $100 million into Iowa. Even at that figure, it's only a tiny fraction of Iowa's total economy—which, according to Swenson, had a $130 billion gross domestic product value in 2007. And 2008 was an abnormal year, with both parties running very competitive contests. This year's race will likely be much smaller. [See photos of candidates at the Iowa Caucuses.]

Swenson claims people often over-estimate how much is spent in early primary states like Iowa and New Hampshire. Despite candidates and political action committees flooding the states with television ads, the state's airwaves would be booked no matter what, and in some cases, the advertising onslaught may bump local Christmas advertising. The consultants who designed the ads, as well as the actors and producers who filmed them, are likely living outside of the state.

The fact still remains that in-state tourism boards and economic agencies tout how much money is spent while reporters and candidates swarm the election sites.

"We sold a lot of men's suits, we sold a lot of wire and cable," says Robin Comstock, president and CEO of the Greater Manchester Chamber of Commerce. Referring to reporters, she noted, "you guys are packing things up on, you don't have some of the very basic things you need to do your job. We find retail does quite well."

But everyone agrees, the real benefit of the early primary states-and the reason why states have battled for them over the years-is the political prestige and media exposure.

Rawl noted that South Carolina's kingmaker status in the GOP race—since 1980, the eventual nominee has won the state—gives the state special importance during a Republican administration.

"It puts us in the position for the White House to look upon the state favorably," Rawl says.