Republicans Are Feeling Good Again, Driving Up Consumer Sentiment: Democrats’ sentiment slips, but overall index ticks higher

By Harriet Torry of The WSJ. Excerpts:

"Republicans are feeling a lot perkier about the economy now that Donald Trump is on his way to the White House. Democrats, less so. 

The index of consumer sentiment in Republican households climbed more than 15 points in November, according to data released Friday by the University of Michigan. In Democratic households, the same index fell by more than 10 points. This release is the first that includes surveys conducted after Election Day."

"The expectations index, which measures how consumers feel about the future, posted even wilder swings. It jumped nearly 28 points for Republicans and plunged nearly 18 points among Democrats.

Economists say such swings are more a reflection of politics than any dramatic changes in the underlying health of the economy over the past couple of weeks."

"“Sentiment polls are supposed to measure what people believe based on their own experience; if they are becoming just another expression of partisan identity, they probably lose most of their value,” said Christopher Carroll, a professor of economics at Johns Hopkins University who has researched consumer sentiment."

"Hector Sandoval, an economist at the University of Florida who has studied consumer sentiment, said there is strong evidence that changes in consumer sentiment affect spending intentions, particularly for spending on nonessential wants rather than needs.

Sandoval expects consumer sentiment to increase following Trump’s election, but said lower borrowing costs and cooling inflation also play a role. His research found that spending increased in Florida counties with a larger share of Republican voters after the 2016 presidential election.

Princeton University economist Atif Mian countered that people don’t necessarily go on a shopping spree if their party wins the White House, even if their internal vibes improve. 

“If I feel good that my government is going to be run more efficiently, it doesn’t really change my day-to-day spending patterns per se,” Mian said. He said economic fundamentals such as productivity, the labor market, regulation and borrowing costs are more important drivers of spending."

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See also Americans start caring more about deficits and the national debt when the party they oppose runs them up by John V. Kane of New York University and Ian G. Anson of The University of Maryland. Excerpt:

"In the past two decades, US budget deficits have skyrocketed, and the national debt is now over $22 trillion. But do Americans care about the size of deficits and the national debt? In new research, John V. Kane and Ian G. Anson find that people tend to care more about the deficits and debts when they are increased by presidents from the party that they oppose. Both Republicans and Democrats, they write, become less concerned about governments running deficits when their President is in charge."