University of Michigan Surveys of Consumers

Partisan attitudes toward economy creates ‘substantial economic uncertainty’

February 23, 2024

ANN ARBOR—Consumer attitudes and expectations are harshly divided along partisan lines, and the divide is wide enough to generate substantial economic uncertainty, according to a special report released by the University of Michigan.

Joanne Hsu, director of U-M’s Surveys of Consumers, and the surveys research team investigated how partisan differences have evolved through the post-COVID inflationary episode and leading into the upcoming election season. They found that partisan gaps in attitudes toward the economy outpaces gaps by income, age and education.

“This suggests that the way consumers interpret ongoing economic trends continues to be colored by partisan perspectives,” said Hsu, also a research associate professor at the Institute for Social Research’s Survey Research Center.

“The size of the partisan divide in expectations has completely dominated rational assessments of ongoing economic trends. This situation is likely to encourage poor decisions by consumers and policymakers alike. While there have always been partisan differences in preferred policies, the overwhelming size and persistence of the partisan gap has generated substantial economic uncertainty.”

Partisan differences in consumer attitudes and expectations are well documented and date back to at least the Reagan administration, according to Hsu. Consumers affiliated with the political party in the White House tend to have higher levels of sentiment and more favorable expectations than those whose party is not.

The researchers found:

  • Despite large partisan differences in consumer sentiment, Independents continue to be consistently in the middle and hold views that reflect national averages. This hold held true when Republican sentiment surged and Democrat sentiment plunged between November 2016 and January 2017, and vice versa in 2020-2021.
  • Between presidential transitions, trends in sentiment and expectations for each political group continue to move in a parallel fashion over time. The fact that all three groups tend to co-move indicates that, despite partisan differences in views and attitudes, the three groups still have much in common in their interpretation of economic trends, and inflection points in sentiment for each political group tend to occur together.
  • The partisan gap in sentiment grew substantially during the Trump administration and narrowed slightly during the Biden administration, but still remains large in magnitude. During the Trump administration, the partisan gap was the largest the  index has ever recorded. The partisan gap has shrunk during Biden’s term but is still almost double the size of the gap during the Obama and Bush administrations.
  • The partisan gap in the overall index of economic news heard eased during the Biden administration. However, the net favorability of news on one of the most prominent economic issues in years—inflation—widened as the inflationary episode progressed.
  • Partisan differences in inflation expectations also grew during the post-pandemic inflationary episode. Republicans’ short-run inflation expectations deteriorated more strongly than for Democrats in 2021 and 2022. Conversely, Democrats’ year-ahead expectations recovered more sharply than that of Republicans as actual inflation softened in 2023.
  • For both short- and long-term expectations of inflation, Independents have consistently been closer to the political party not in the White House, rather than being squarely in the middle as they typically are for other measures.
  • A growing share of consumers spontaneously mention that future economic outcomes are contingent on the upcoming election, but there are few differences in expectations between those mentioning elections and those who do not.

The Michigan surveys continue to reach a nationally representative of Americans across the political spectrum, Hsu said. In December 2023, the Surveys of Consumers as well as Gallup polling showed 28% of the respondents identified as Republicans and 29% identified as Democrats.

Study: Partisan Perceptions and Expectations

Contact: Morgan Sherburne, 734-647-1844, [email protected]

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