Monday , 20 November 2017


U.S. Economic Assessment: Democrat vs. Republican

…Gallup’s weekly Economic Confidence Index shows that confidenceeconomy-2h-8 has soared among Republicans but has plunged among Democrats… yet hardly anything in the economy has changed in those months since the election, either to benefit Republicans or to hurt Democrats, so what does this divergence of views mean for the economy going forward?

The comments above & below are edited ([ ]) and abridged (…) excerpts from the original article written by Wolf Richter (WolfStreet.com)

Gallup’s weekly Economic Confidence Index shows to what extremes both moves have gone:  [Check out https://goo.gl/T2fnWj – Register for chance to win an iPad Pro!]

  • how the surge of economic confidence among Republicans has been far larger than the plunge in confidence among Democrats, and
  • that the overall decline recently isn’t because Republicans are losing faith – their confidence remains at super-high levels – but because Democrats are becoming ever more gloomy.

The chart below of Gallup’s weekly Economic Confidence Index shows the Trump Bump right after the election and how it has begun to taper off:

The index started in 2008 during the Financial Crisis. With its theoretical range from +100 to -100, it has consistently depicted consumers as a gloomy bunch, ranging from -65 in October 2008 to a pre-Trump peak of +5 in January 2015 but, after the election, economic confidence jumped, hitting +16 in March and that was it. By early May it was…[down to] the +3 range and has remained there…

What’s causing the Trump Bump to fizzle?

It’s not the Republicans. The chart below by Gallup, which breaks up economic confidence by political preference, shows just how much Republicans’ economic confidence has shot up (red line). They used to be super-gloomy, at -45, practically in Financial Crisis mode before the election. Since then, confidence has skyrocketed 91 points to +46 and has remained there. Economic nirvana so to speak.

Democrats’ economic confidence (blue line) plunged 59 points, from +30 to -29, and it continues to drift lower without signs of bottoming out yet:

…The index [above] is an average of two components: how Americans feel about current economic conditions; and how they rate future economic conditions – whether the economy is going to get better or worse.

In terms of current economic conditions, Democrats lost confidence after the election, but remained fairly upbeat compared to Republicans until about the inauguration. Then Democrats threw in the towel on the economy. Since the election, their rating of current economic conditions dropped 33 points, while Republicans’ rating of those very same economic conditions soared 58 points:

In terms of future economic outlook, the divergence reaches extremes. Republicans’ economic outlook skyrocketed 124 points from a depression-like -67 to a heaven-on-earth-like +57, though that too has slipped from the peak of 63 after the inauguration. At the same time, Democrats’ economic outlook plummeted 86 points from +31 to -55. Note that the current economic depression for Democrats is still not as bad as it was for Republicans before the election – so it has room to fall and might soon get there.

Here’s the thing, though. Hardly anything in the economy has changed in those months since the election, neither to benefit Republicans nor to hurt Democrats. None of Trumps major economic policies have been passed by Congress, and there are increasing doubts as to what exactly will eventually emerge, so the economic reality is the same as before the election: soaring financial markets and subpar economic growth.

Gallup points out that some of this is normal, that “partisans’ evaluations of the economy change when new presidents are elected, when they take office, and in their first months on the job.”

There are other reasons why confidence surveys change, such as stock market crashes, mediatized economic problems, or some Congressional fiascos such as a down-to-the-wire debt-ceiling fight that pushes the U.S. to the edge of default. The Financial Crisis demolished economic confidence for years.

What does this divergence of views mean for the economy?

What does it mean for the economy when Democrats descend into gloominess and Republicans become rampant optimists? For one thing, they’re switching roles, with Republicans more confident than Democrats used to be, and with Democrats less gloomy than Republicans used to be, so the net effect should be positive.

…Will Republicans…[with] extra money lying around suddenly spend more than they would have spent before? Will Democrats suddenly close their wallets? The signs say no.

Sentiment surveys are one thing. Real life is another. Over half of the Americans spend every dime they make, plus some. They have trouble making ends meet. How they feel about the economy isn’t going to change their spending patterns and those with extra money to burn or room left on their credit cards, well, they have not yet stepped up to the plate either…Neither one apparently wants to go to the mall anymore.

Thanks for reading! Visit our Facebook page (here) and “Like” any article so you can “Follow the munKNEE” and get future articles automatically delivered to your feed.

Win An iPad Pro!

TalkMarkets.com is so convinced you’ll love their website they are raffling off an iPad Pro to those who registers here by June 30, 2017. For more information please read the contest Terms and Conditions.
975 authors contribute to TalkMarkets.com so check it out, register here and then program the site to provide you with exactly what you want by author & topic. Check out my profile & articles on TM here.
If you want more articles like the one above: LIKE us on Facebook; “Follow the munKNEE” on Twitter or register to receive our FREE tri-weekly newsletter (see sample here , sign up in top right hand corner).