What the economists call “consumer sentiment” is based on answers to five poll questions that ask people how they think things are going in the economy, and how they expect things in general to be going in a year or so. (You can read the five questions here.)
Of course, most people don’t know much about these economic indexes and nobody knows how things will be going a year from now. Nonetheless, stories about consumer sentiment are based on the answers to these questions.
Writing not for his column but a New York Times newsletter, Paul Krugman demonstrates — pretty convincingly, to me at least — that most of the time, when respondents are asked these questions about how they feel about economic times just ahead, you might as well just ask them which political party they are in.
Throughout 2019, when Trump was president, Republicans consistently scored about 40 points higher than Democrats in their estimation of how the economy was going. The “consumer estimate” score of Republicans hovered around 120, while Democrats were at 80 or below.
Then suddenly, in November of 2020, the month Joe Biden beat Donald Trump but before he even had a chance to take office, Democrats’ composite assessment of the economy shot up more than 20 points and Republicans composite assessment dropped immediately and steadily so that their negative view of the economy was even lower than the Democrats’ view had been when Trump occupied the Oval Office.
At the beginning of 2020, Republicans scored the economy at 120 on the scale, Democrats scored 80. The lines crossed in November, and the blue line kept going up until it was over 100 in the spring of 2021. The red line plunged even more dramatically, dropping from about 125 at the beginning of 2020 to under 40 (!!) In the November 2021 survey.
Sure, there may be some movement in economic indicators supporting some of these jumps and drops. Maybe there always are. But what couldn’t be clearer is this: Democrats and Republicans traded positions on the optimism-pessimism scales about the economy, even before Biden took office but in November, as soon as Biden won the election even before he and his fellow Democrats had a chance to do anything.
Assuming they are living in roughly the same economy, and assuming the economy isn’t trying to make this happen, somehow or other, the 40 points that separated the Republicans’ high rating from the Democrats’ low rating has now flipped entirely over, with the latest numbers showing Democrats scoring the economy 40 points higher than the Republicans.
Reading Krugman’s newsletter piece, there was apparently a time when answers to questions about the economy didn’t depend quite so heavily on partisanship. But now…
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