One of the Three is Not Like the Others: The Partisan Divide and Economic Sentiment

Here’s the U.Michigan sentiment indices for three partisan groupings, vs. the SF Fed News Sentiment index.

Figure 1: CShapiro, Sudhof and Wilson (2020) Daily News Sentiment Index (black, left scale), University of Michigan Consumer Sentiment for Democrats (blue), Independents (green), and Republicans (red).  Source: U.Mich, SF Fed, and author’s calculations.

Here’s the same plot, but using the (inverted) Misery Index (simple sum of y/y CPI inflation rate and unemployment rate).

Figure 2: Inverted Misery Index (black, left scale), University of Michigan Consumer Sentiment for Democrats (blue), Independents (green), and Republicans (red).  The Misery Index for January uses Cleveland Fed nowcast for CPI as of 2/2/2024. Source: BLS via FRED, Cleveland Fed, U.Mich, and author’s calculations.

Republican sentiment is flat even as Democratic and Independent sentiment trends up with either news sentiment or inverted Misery.

Note that there is sampling error for each of these indices, so I don’t know if the differences in movements (let alone levels) are statistically significant. What I do know is that the adj.R2 for a regression of Democratic sentiment on news sentiment is about twice that for Republican, and the coefficient is about 50% larger, for the period 2021-2024M01.

More on the indices, see here.


19 thoughts on “One of the Three is Not Like the Others: The Partisan Divide and Economic Sentiment

  1. Moses Herzog

    “Inverted Misery”

    uuuuuhh, now Menzie, you did it again, [ sardonic anger ] you went and expanded my Lexicon you darned so and so. I think I saw Justin Lahart on PBS NewsHour recently, and I am very impressed with this young gentleman. If I was talking eye-to-eye with Justin Lahart, I might be tempted to make the borderline racist statement “Justin, you’re a credit to your race.”. So, maybe I would think twice and just tell Justin “You’re a damned good journalist Justin”

  2. Moses Herzog

    Oh, damn, I am such a damned screw-up. The Black reporter’s name is Dion Rabouin, he explains the recent surprising U.S. jobs numbers in the attached video. He did not write the article. Well I am STILL impressed with Dion Rabouin,. whatever the hell his name is.

  3. Moses Herzog

    Thanks for putting my comments up Menzie, I know you thought twice about it. I’ll show you in emails, my distress about Oklahoma’s local voting system. How I think it is still ok, but two women are trying to undermine it right now. In the emails tonight Prof Chinn

    Did anyone read “Heat 2” novel yet?? Or watch some old stuff?? let me know. That’s one of my favorite films of all time. I hope they do the film casting right

    1. Macroduck

      Moses, about Goolsbee’s comment on part-time workers – In November and December, part-timers rose by more than total jobs. The part-time gain was far smaller in January. Here are two presentations of the two series (two different scales on the second one):

      Timing suggests seasonal distortion from holiday hiring, even though both series are seasonally adjusted.

      Part-time hiring would certainly mess with the workweek, hourly earnings and the payroll index.

      1. Moses Herzog

        MD, I don’t know if you’re agreeing or disagreeing with me. Forgive me. PLEASE. “part-time” and “temporary” are different things, yes?? Sincerely Asking. I think you’re saying, “seasonal” means more than “part-time”?? I’m asking because (no sarcasm) you are SO MUCH better at balancing these different numbers than I am. That’s my TRUTH to you MD.

        1. Macroduck

          I’m just digging up data.

          Part-time and temporary are different in concept, and often in reality. Around the holidays and during the summer break, the Venn diagram for part-time and temporary overlap more than at other times of the year.

          1. Moses Herzog

            MacroD, I’m drinking now, but you “get” me brother. You “get” me. When I’m drinking I get fuzzy in my head. But you knew (same to Menzie) when I’m bowing to you, and when I’m being sarcastic,. You “get” me. I use sarcasm a lot. so—-you got the “Moses Code” That’s a special talent friend. I wish my Ex_GF from Chaoyang got that at the dinner with her parents, that I took a train from Dalian to Chaoyang with a big bottle of Maotai white wine for her Dad, FAIL and prostrate myself to…….. Waw waw waaaaaaww. (sad muted trumpet)

            That’s what an American dork gets for falling in love with a maths major at the Teachers UNiversity of Liaoning Dalian from sh*t-hole Chaoyang China. Don’t aim over your head for any girl. Football broadcasters call it “outkicking your coverage” MAcro D

          2. Baffling

            My aunt worked at the local walmart for a decade. They would not hire her (and others) full time, intentionally, so they had to pay less in benefits. The workers wanted full time, but were part time workers for years. If they are temps, would only hire over the holidays. But part timers are randomly assigned work throughout a 40 hour work week, to keep them from getting a second or possible full time job. Effectively on call full time with part time pay. Lousy tactics by walmart when they become only employer in town. That is how i see the difference between part time and temporary.

  4. Macroduck

    Anyone have a good feel for regional growth trends in the U.S? I have questions.

    First, a bit of common wisdom about regional economic growth from “Understanding Patterns in U.S. Regional Economic Growth” by Charles S. Gascon and Thomas Walstrum at the St. Louis Fed:

    “For much of the 20th century, productivity growth was faster in places with lower initial levels of productivity and wages. The transition of workers from lower-productivity agriculture jobs to higher-productivity manufacturing and service sector jobs was the primary reason that lower-wage places began catching up to higher-wage places. This transition was particularly beneficial for Southern states, which were concentrated in agriculture.”

    Shorter version: Firms set up shop in lower-wage, lower-productivity regions (the Southern U.S.), bring in capital to increase productivity, then reap greater profits as wage gains lag productivity gains.

    So I find this interesting:

    “Suppliers were informed that if substantial cost reductions are not achieved, Nissan may consider relocating Rogue production out of Tennessee entirely, potentially moving it back to Japan.”

    That may simply be standard jawboning when asking for price reductions. Nissan is negotiating 20% to 30% discounts from parts suppliers for the coming redesign of the Rouge SUV, made in Smyrna, Tennessee. That seems pretty big to me. Some of those suppliers are also in middle Tennessee. Nissan Leaf production is already reportedly moving from Smyrna to the UK, a done deal.

    A little context. Nissan’s Smyrna plant was part of the wave of factory investment that created the “growth smile” in the South. Rutherford County, where the plant is located, is one of the 50 fastest growing counties in the U.S., along with three close by counties:

    Cost-cutting for Nissan in income-cutting for middle Tennessee. So I’m wondering whether this is just a wobble in continuing rapid growth in the “smile” region, or evidence that Southern growth may be slowing. Tennessee’s median income is still just 41st among U.S. states, but may that’s too much.

    1. James

      Macroduck – thanks! This economic/social/political dynamic is intriguing for me – I always wonder how red state/Republican political leadership that refuses to provide good public education/public healthcare/ decent public infrastructure – plays into this dynamic. Hence urban/suburban areas that trend increasingly progressive and rural areas that are “stuck with their lot” but the Bible and the local GOP politician tells them “that there ain’t no better anywhere else and they are living in God’s country.” With the power of gerrymandering – the GOP gets control of state legislature and hobbles any kind of progressive legislation.
      The example I am thinking of is Wisconsin – where the state legislature is controlled 60% GOP to 40% Dem but in the most recent statewide race – WI voted 55% progressive/Dem to MAGA GOP 45%
      (note to WIGOP – stop with the abortion bans, take the federal ACA expansion money, and legalize marijuana or you will continue to lose voters.)

  5. Bruce Hall

    I know Jamie Dimon will be considered a Trumper because he says the National debt is a significant danger. But then he might be called a Progressive taxer because he favors increasing taxes on the wealth and removing SALT deductions. He’s probably just one of those uneducated nutcases, right?

    Obviously, the national shutdown for COVID and the money appropriated to stabilize the economy added to the rise of the public debt, but the rapid growth was there since 2009.

    So, is it just happy days are here again? After all… sentiment.

    1. pgl

      Dumber than a retarded rock as usual but no need to address your spin as it has motivated a new post from Dr. Chinn. Oh wait – it was all Jimmy Carter’s fault I guess!

    2. JohnH

      pgl just hates it when you bring up the fact that you can increase taxes the wealthy and use the revenues to stimulate economic growth, as Dimon proposed.

      Curious how hard it is to find a liberal, mainstream economist willing to tax the wealthy to grow the economy–they’re what you used to call “limousine liberals,” who cheer any liberal cause as long as it doesn’t negatively affect the finances of them or their bosses!

      1. pgl

        Dude – you are more retarded than a damn rock. If you think Bruce Hall is advocating more taxes on the rich, then you have no clue. Brucie is a Trump cheerleader. No please explain to us all how that 2017 tax cut was progressive economics. This should be a laugh riot.

  6. pgl

    Hey Brucie – under Dr. Chinn’s post I made this notation:

    Oh wait – Nobel Prize winning Bruce Hall used this FRED metric:
    Federal Debt: Total Public Debt (GFDEBTN)

    Shame on our host for doing this relative to GDP. After all – the price level never rises and real income has been flat all these years – right? Remember Bruce Hall cuts and pastes those emails from Kelly Anne Conway which means they must be accurate and well informed presentations!

  7. Willie

    I would be curious to know if there’s a regional breakdown of the misery index and economic sentiment levels. There are Republican areas and Democratic areas, and it’s possible that places with a lot of Republicans are not doing very well right now. In 2016, some very specific local economic problems were one of the factors in the outcome. And, it would be interesting to see how the different areas are doing, within individual states.

    I doubt if anybody cut it that fine, though, and certainly not to amuse a non-technical observer like me.

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