In the past few days, the US economy has soared to new heights of economic prosperity—in the reported perception of Republican voters. Meanwhile, economic prosperity has all but disappeared—in the reported perception of Democrats. The US election result triggered these swings. The reality of economic experience cannot justify such moves, UBS’ economist Paul Donovan notes.
Aggregate US sentiment indicators may turn more positive
“The US two-party system, coupled with voters openly registering their political interest (with a brazenness uncommon in other cultures), makes the political distortion in US sentiment surveys very transparent. But growing problems with survey reliability suggest that political bias is a problem across developed economies.”
“The fact that people seem inclined to answer questions about the real economy with the pre-determined views of their political tribe undermines the value of such survey-based evidence, by weakening the relationship between reported sentiment and the actual economic behavior of consumers and companies.”
“Opposing political views might be thought to cancel each other out, but that does not seem to be the case. On the admittedly limited US evidence of the past eight years, Republican sentiment has swung more wildly than Democrat sentiment—perhaps Republicans are more passionately partisan. This suggests that aggregate US sentiment indicators may turn more positive following the election, for purely political reasons.”
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