In 2025, it depends. Particularly if you are a Republican/Lean Republic — then it’s almost zero…
Here’s the relationship of different groups disaggregated by partisan affiliation, against news sentiment (lexographically defined from newspapers), as measured by the SF Fed.
Figure 1: U.Mich Sentiment – Democratic/Democratic leaning (blue, left scale), and SF Fed News Sentiment index (tan, right scale). October News Sentiment is through 10/26. Source: U.Michigan, and SF Fed.
Figure 2: U.Mich Sentiment – Independent (chartreuse, left scale), and SF Fed News Sentiment index (tan, right scale). October News Sentiment is through 10/26. Source: U.Michigan, and SF Fed.
Figure 3: U.Mich Sentiment – Republican/Republican leaning (red, left scale), and SF Fed News Sentiment index (tan, right scale). October News Sentiment is through 10/26. Source: U.Michigan, and SF Fed.
The sensitivity of sentiment to news sentiment is 0.88 for Democratic/Lean Democratic, 0.66 for independents (both coefficients statistically significant at conventional levels, and adj-R2 of 0.70 and 0.82, respectively). For Republican/Lean Republican, the coefficient is -17, and is not statistically significant. The adj-R2 is 0.02. In other words, measured news sentiment is unrelated to Republican/Lean Republican economic sentiment.
One interesting aspect of the results is that Republican/Lean Republican expectations are positively associated with news sentiment, while current conditions are negatively associated (the worse the news, the better the assessment of current conditions). This is not true for Democratic/Lean Democratic or Independents. Here’s a scatterplot.
Figure 4: U.Mich Current conditions – Republican/Republican leaning vs. SF Fed News Sentiment index, 2025M01-2025M10. Source: U.Michigan, and SF Fed.
Faux News and those of similar ilk are probably a big factor. If those whom one has chosen as a source of news insist that the news is good, then the news is good. If bad, then bad. Murdock and the Koch brothers and iheartradio have created a world in which a perverse understanding of reality is the only understanding of reality.
Authoritarian states always control the news. Faux News and its ilk represent the not-so-special case in which the news serves the cause of authoritarianism before there is an authoritarian state.
Some of us saw this coming.
Trump and Bill Pulte have come up with a brilliant solution to the high cost of housing — get this, the 50-year mortgage!
It’s like Gillette vs Schick — we’ve got 4 blades — oh yeah, we’ve got 5 blades! Take that!
FDR gave us the 30-year mortgage so Trump goes a blade better and gives us 50 years!
Here’s some typical numbers:
Assume a $500,000 mortgage. At 6% your 30-year mortgages costs you $36,000 a year in payments. Your 50-year mortgage at 6.5% (for longer term) costs you $34,000 a year in payments.
So by lengthening your mortgage by an additional 20 years you reduce your payments by a measly $2,000 a year. But you double your total interest paid from $600,000 to $1,200,000. And after 30 years, instead of owning your home free and clear, you own only 25% of it!
Do they think that cutting your monthly mortgage payment by $170 a month is the make or break for home ownership? And that the American dream of home ownership means owning 25% of it after 30 years?
I read Japan had multi-generation mortgages.
100-year mortgages were a thing in Japan in the 1980s during their housing bubble and popular with home flippers because it was essentially an interest only loan requiring low cash flow. They didn’t intend to hold it for the full term, but just long enough to flip.
Today the longest mortgage in Japan is fixed rate 35 years. But most mortgages are shorter term variable rate.
to correct our real estate market, the 30 year mortgage should be banned. a 15 to 20 year mortgage should be the standard. in the usa, too much money is locked into these 30 year mortgages. people are paying far too much for their homes in interest, and are simply not aware of that fact. the 30 year mortgage has led to the housing bubble, moreso that any other factor over the past few decades, imo.
While many mortgages are 30 years, the average length that a mortgage is held is only 10 or 12 years. People either move or refinance long before 30 years. So they are paying an extra 0.5% or more in interest to lock in a long term fixed rate that they will never use up.
they are paying more than that 0.5% interest, because they are not building up equity in there home in those 10 years of the 30 year mortgage. Most of it is rent in the form of interest. Now it is true that a 15 year mortgage has a higher monthly payment, but my point is that is probably the monthly payment people should be looking at to determine affordability. which means houses are overvalued at this point in time, because a 15 year mortgage would require a drop in house prices.
anybody promoting a 30 year, or especially a 50 year mortgage, is only looking out for the seller today and has zero regard for the financial position the buyer is getting into. 30 year mortgages have resulted in an increase in the housing value, the real estate bubble you see today. long duration loans will almost always produce a bubble that benefits sellers today to the detriment of the buyer in the future.
if trump is serious about housing affordability in the long term, he should be promoting 15 year mortgages, not 50 year mortgages.
Sorry, but I don’t understand the title and the graphs for this presentation How Sensitive Is Economic Sentiment Respond to News. I would suppose the Republics would be more positive to news these days and the Dems less so. But the axis on the graphs are not clear to me. Maybe it’s me.
Tom B: In all categories (Democratic, Independent, Republican) sentiment, current conditions and future expectations respond positively to economic news as summarized by the SF Fed’s News Sentiment index. The sole exception is Republican future expectations, which respond perversely to positive economic news. In other words, Figure 4 negative slope is not replicated in any other combination.