Why the long face?

Blog: Just the social facts, ma'am

Abstract

 Paul Krugman recently asked why people have negative views of the economy even though economic conditions are pretty good.  He suggested that one reason was partisanship--specifically, that Republicans have become more likely to rate the economy as bad just because a Democrat is in office.  I discussed this possibility back in July 2021 and said that there was a clear increase in the effect of partisanship on economic expectations, but that we couldn't be sure about whether there was a change in the effect on ratings of current conditions.  But that was early in Biden's presidency, so there's more information now (data are from the Michigan Surveys of Consumers, which are conducted every month).   The partisan gap (president's party minus opposition party) in ratings of current conditions* and expectation of future conditions:                            Current            Expected        ObservationsCarter                         5.5                  3.1                          1Reagan                      16.0               23.3                          5GW Bush                  16.6               18.4                        10Obama                        7.6               23.3                        25Trump                       21.7               52.0                        46Biden                        19.3               44.0                        30The partisan gap in expectations became larger under Trump and has remained large under Biden.  But the gap in ratings of current hasn't shown any trend--the only thing that stands out is that it was smaller under Obama.  So the issue isn't that Republicans are particularly negative:  it's that everyone is.  Currently, Democratic ratings of the economy are about what they were in the middle of 2010, when unemployment was over 9%.The Michigan surveys didn't regularly ask about party identification until recently, but the ratings of economic conditions go back to the early 1950s.  The horizontal line is the level in the latest survey (March 2023).  Although ratings have been improving since the middle of 2022, they are still very low by historical standards.  The measure of expectations:  Expectations are also low, but they don't stand out as much.  Another way to look at it is to consider the relationship between ratings of current conditions and expectations:The dotted line is the regression line--observations in Biden's presidency are in green.  They are all close to the line, with no tendency to be above or below.  I also indicated the early (Truman-Kennedy) presidencies in blue, because I noticed that expectations were consistently favorable relative to ratings of current conditions in those years.  I'm not sure why that would be the case, but it seems interesting.  The points below the line (expectations negative relative to ratings of current conditions) were mostly in the last years of the Carter administration, which seems reasonable to me given my memory of that time--there was a general sense that things were falling apart.  When you get puzzling results with survey data, a good place to begin is to look for other questions on the same topic, and see if they point in the same direction.  That's what I'll do in my next post.  *The Michigan index is composed of answers to two questions:  "Would you say that you (and your family living there) are better off or worse off financially than you were a year ago?"  and "About the big things people buy for their homes--such as furniture, a refrigerator, stove, television, and things like that. Generally speaking, do you think now is a good or bad time for people to buy major household items?"