The U.S. economy is chugging along pretty well. Unemployment is low. So is inflation. James Glassman asks: So why aren’t Americans happier about it?
Since January 2001 Gallup has conducted monthly polls that ask Americans to rate the nation’s economic condition: What is mind-boggling is that more respondents fall into the negative camp now than during the 2001 recession. Today, respondents who are negative on the economy outweigh those who are positive by more than two-to-one. Gallup concludes that “Americans’ views of economic conditions in this country have essentially never recovered from the precipitous drop they took in 2001 after the dot-com boom ended.” Pollsters and politicians have noticed that there are lags in the public’s perception of how the economy is doing, but the length of the delay this time is a little ridiculous. The recession ended four and a half years ago; unemployment peaked in mid-2003. There may be better explanations. For example, a 2004 paper by Princeton economists Alan Blinder and Alan Krueger explores the fascinating question of how the public forms its opinions — not on the economy but on economic policy — and finds that “ideology is the most important determinant…while measures of self-interest are least important.” Gallup hints at a similar conclusion: data show consistently that Americans who identify with the party in power “are more positive about the way things are going in the country.” In other words, it’s not reality but partisanship or ideology that determines one’s view of the economic situation.
Sadly, I think there’s something to this theory that ideology-trumps-reality: “If ‘my guy’ isn’t in the White House, then the economy must be a mess!” But what if who’s in power is less clear? Our government spends less when one party is in the White House and the other controls Congress. Is this another reason to root for divided government?
If this analysis is correct, then Republicans will have a difficult time this November. Since President Bush took office, the period when Americans felt best about the economy was the third quarter of 2004, just before his re-election, when 32 percent were positive and 42 percent negative, compared with a 25-55 split today. In other words, supporters are abandoning the president — most likely for reasons other than the economy, such as the war in Iraq — and an improvement in the economy won’t help.
If this is true, it’s too bad that we can’t separate the economy from how we feel about other issues. Then again, maybe there’s some good news in here. At least the change in opinion occurred while the same guy was in office. In other words, while our political affiliations might shape how we see the economic conditions, for a good chunk of us there comes a point when we no longer stand by our man simply because we identify with the party in power. Whole thing here.