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…
Then there’s this from Gallup (Oct 6, 2021):
“As might be expected, Republicans and Democrats overwhelmingly view their preferred party as better able to handle the most important problems, to keep the country safe from international threats and to keep the country prosperous. Thus, when perceptions of which party is better able to handle these issues change, as occurred this year, independents are usually behind those shifts.
Since last year, there have been double-digit declines in the percentages of independents who say the Democratic Party is better at handling the most important problems (from 42% to 31%), at keeping the nation secure (from 43% to 31%) and at keeping the nation prosperous (from 47% to 35%).
Republicans’ gains on these same issues have been smaller, as some independents have shifted to saying neither party is better able to handle these issues. There has been an eight-point increase among independents in saying the Republican Party is better at keeping the country prosperous (from 43% to 51%), a five-point increase for keeping the nation secure (from 48% to 53%) and a nonsignificant two-point change on the most important problems (from 29% to 31%).”
https://news.gallup.com/poll/355511/gop-viewed-better-party-security-prosperity.aspx
Where Krugman and Mr. Black get it wrong is everyone fills their gas tank, buys groceries, buys clothes and can see with their own eyes what it costs. Consumer confidence is directly affected by how far your money goes. Saying folks are not intelligent enough to understand the complexities of markets is just an excuse. Independents always have the biggest swings in these polls and are expressing no confidence in this Biden Administration. Just look at the ports of L A, where goods are stacked up and container ships stretch for miles, Biden asks Longshoreman to work more when issue is not enough trucks picking up goods. That doesn’t inspire trust.
Pretty soon Biden will publicly ask regulatory agencies to investigate companies for problems he is actively making worse. Oh wait, it’s already happening.
What can the President do about getting more trucks to Long Beach?
There is a national shortage of over-the-road truckers. The DOT is trying to ease the requirements for a CDL, but that takes time, and will not make the job more attractive to a lot of people.
Inflation and supply chain problems are worldwide, but someone its all Biden’s fault. Its like the people who thought Covid was a Democratic plot to oust Trump, and not something affecting every country on earth.
Unfortunately most of us are old enough to recall Democrats blaming Trump for every Covid death in this country. But Im sure that wasn’t a cynical election season strategy.
Not me!
I only blame Trump for 2/3 of all COVID deaths because that is how bad we were compared to worldwide averages.
We know Trump is no Angela Merkel when it comes to brain power, but the slogan should have been:
Make America Average Again!
Your dear leader does have the blood of 750,000 people on his hands (as do Republicans in general for their ignorance). He dithered and lied, and then told you folks to drink Clorox (hopefully you didn’t take his advice, but who knows).
Something to do with Trump first denying the existence of Covid (‘It’s just the flu’), then delaying the response to it.
The problem is the response of Biden’s babysitters to these worldwide issues has been ineffective and/or made the issues worse.
Why does Conservative Boris Johnson and the UK have the same issues?
Hearing someone refer to “Biden’s babysitters” is your first indication of a well-reasoned, persuasive comment.
Pat, supply chain was exactly the same one year ago, why no issues then?
Wrong!!
A year ago, supply was greater and demand was lower. In fact, right now, our imports are at an all time high.
So why do we see shortages? Because demand is greater than supply right now. Why? Because private companies made decisions relating to manufacturing and inventory. Those decisions turned out to be wrong.
If you think Biden should have done something about that, then you must be a socialist.
The supply chain has been the same for years and demand is up 1-3% from a year ago. The problem in LA ports is 1/2 of the available 18 wheelers don’t qualify, pollution control wise, to be on the docks. California, especially LA, has emission control standards higher than the rest of the country. Truckers can’t afford the 35-90k fixes to their rigs to qualify for port entry. As I said, Biden decides to have workers who are unloading containers work more, when the issue is getting containers off the dock and on the road. There is no more area left on the docks for containers, moving them the issue.
In business if you cannot identify the problem, you never fix the problem!
Wrong again, Mr. Smith.
Imports are up about 10% from a year ago. A very significant increase when you consider that inventories were slashed, meaning no buffer. And, by the way, that’s actual imports, not just demand.
Meanwhile, the number of truck drivers are decreasing (6.8% decrease from 2019 to 2020 according to the ATA). They are exercising their free market right to choose their employment.
Shortage of product is due in part to the shipping containers not being available and, as you note, stacking up. But this is a by-product of the reduced demand from a year ago leaving containers in the wrong place. These containers, and the movement of these containers, are controlled by private enterprise.
You pay lip service to private enterprise, yet seem to blame government when decisions by those companies turn out to be sub-optimal.
“The problem in LA ports is 1/2 of the available 18 wheelers don’t qualify, pollution control wise, to be on the docks.”
Joe, I shouldn’t have to do your homework for you, but even a quick search will show that argument to be false. It’s nonsense from some Facebook poster. Most trucks – something like 96% – that have been operating in California are in compliance with the existing regulations. This is a rule that has been in place for some time. It wasn’t created by the Biden administration just for the occasion (BLM also had nothing to do with it).
I know you will wax indignant at being contradicted, but anyone who wants to see the real story can find it here: https://www.usatoday.com/story/news/factcheck/2021/10/18/fact-check-california-cargo-backlog-not-due-trucking-regulations/8456582002/
Because demand was much lower then.
Demand over the past year has outstripped supply, driving inflation.
News Flash:
You pay someone $18 / hour to flip burgers the price of burgers may go up: And both are OK by me.
Henry Ford raised wages to enable his workers to be able to afford his product.
We have seen the exact opposite with the Walmartization of America: sell cheap imported goods so workers can be denied increased wages.
I’m voting for Henry…
Considering where we started from, I don’t think we are doing too badly. At the height of the pandemic, I thought the world was coming to an end, in terms of the economy. It hasn’t, at least not so far.
“Not with a bang but a whimper”?
Naturally there is something to this aspect of “consumer sentiment”, because those who favor Dem policies know that the governing tenets of “conservatism” will often be bad for the economy, while America’s “conservatives” have been fed precisely the opposite “information” by their “news” sources.
The reality is that the US macro-economy typically does objectively better under Dem administrations/Congresses than Repub ones. (No, I’m not going to dig up the cites.) Bush/Cheney left the economy a shambles as a result of their maladministration leading to the Great Recession. Obama and the Dems then had to rescue it (against implacable Repub opposition and obstruction.) Popular voter-loser Trump left the economy in an even greater shambles than Bush as a result of Covid mishandling and brainless fiscal policies and now Biden and (most) Dem are again attempting to rescue it (against implacable Repub opposition, as usual.) One can perform the same exercise across the entire Conservative Era (1980-202?).
Now there was no particular reason to think that the Obama economy was going to tank upon the “election” of the Trump minority-rule government in 2016. Of course Repubs were going to enact their obligatory tax cuts for plutocrats and of course they were going to cease regulatory oversight of the nation’s economy, all to the benefit of the plutocrats; that’s what they do. So large US corporations were going to have a massive increase in profits, and the stock market was going to rally. That was easy to predict. But wrecking the fiscal position of the government for no good purpose whatsoever is still not a great boon for an economy, and Dems were/are fully justified in seeing things this way when Repubs are in power.
Now, one has to be a special kind of imbecile to be thinking that the economy was doing well from March 2020 on, since the macroeconomic data was in some cases worse than that of the Great Depression. And if Repubs were giving high marks to the economy in such a situation, they have left rational thought and mental objectivity in the trash bin. Further, it made perfect sense to believe that the proposed policies of the Biden administration would aid the nation’s economy and return from the dead, and if some Dems jumped the gun a bit in declaring confidence in the economy, that’s hardly the greatest hypocrisy ever seen.
Today we have the spectacle of the nation’s Repubs desperately wishing for a return of significant inflation, as they think that will cause enough of America’s rubes to vote for an anti-democratic, quasi-fascist party, in the face of all common sense and self interest. As though giving the Congress to the “conservative” party would do anything to combat inflation, should it actually persist. The Repub prescription, of course would be nothing but radical cuts to non-defense spending; like tax cuts, that’s their prescription for every economic situation.
So sure, voters’ sentiments about the economy have some connection to their party affiliation; but it makes far more sense for Dems to feel this way in the 21st Century than Repubs. So what else is new?
“…they have left rational thought and mental objectivity in the trash bin…” This strikes me as a fair description of far too many Republicans over the past several decades, and of the party itself since Trump the Demagogue ascended to power.
I know the polarization narrative is a powerful myth among US journalists so it’s important to keep a few things in mind.
First, both Republican and Democrats are actually minorities. Democrats and Republicans each share 26% of the population while “independents” are now the largest political group with 44% of the population. The days of obsessing over the duopoly as if reality is determined by two parties are over. The two parties still vie for elections, but the idea that one or the other represents a majority at this point is dubious to say the least.
If you take any issue that is allegedly “dividing” us from abortion to vaccines you will actually find clear majorities. We are actually coalescing around a variety of conclusions rather than dividing.
Meanwhile, polls do indicate that a majority of Americans have dark views of the economy in the last 5-6 months, but that’s not about Party affiliation it’s driven by personal experience. Evictions, prices, and ongoing pandemic and pandemic supply chain crisis are adversely affecting hundreds of millions of Americans, of course that sours a few moods here and there.
Biden’s build-back actually contains a lot of spending that will promote recovery, the supply chain will return to function, and the current COVID surge will pass (unless another wicked variant emerges). Not to mention the fact that American workers are finally standing up for better wages, health care, and affordable housing. Things could look very different this time next year, specially if Democrats find and promote popular candidates and finally sign off on popular agendas that will energize and unite Americans.
In response to the headline, always has, at least for the last 40 years.
And two, the only economy that matters is your own personal one. Cynical but true
“there was apparently a time when answers to questions about the economy didn’t depend quite so heavily on partisanship”, when?