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The Consumer Confidence Gap Between Democrats and Republicans Has Never Been Wider

Feb 24, 2017

When it comes to confidence in the U.S. economy, the partisan divide is the widest ever on record. Democrats are expecting an outright recession, whereas Republicans are expecting the exact opposite–and getting ready to let the boom times roll.

But ask those same people about their personal plans for spending over the next few months, and they’re less likely to respond in an ideological way. Instead, they answer the question based mainly on data from their day-to-day lives, like prices, interest rates and changes in their income.

The latest figures released by the University of Michigan Surveys of Consumers on Friday show sentiment among Republicans was 120.1, in line with expectations for robust economic growth, whereas it was only 55.5 for Democrats – a number predicting recession. The gap between the two is the widest on record, since the study started in 1945, according to Richard Curtin, who compiles the survey.

Interestingly, there was only one question on the entire survey where Democrats scored more optimistically than Republicans, Curtin told Fortune in an interview. Although Democrats predict a recession when they’re asked about the economy as a whole, they view their current personal finances more favorably than their Republican counterparts. They were more likely to cite stock market gains and income gains as reasons for optimism about their own household finances.

This partisan breakdown within the consumer sentiment indicators is important to remember, given that soaring confidence indexes have helped drive the stock market to record highs recently. It raises questions about the validity of consumer sentiment metrics at a time when, perhaps, Americans are becoming more entrenched in their ideological echo chambers. In its “Blue Feed, Red Feed” experiment last year, the Wall Street Journal expertly highlighted how the news we see on our Facebook feeds varies dramatically based on our political ideologies.

For more on how consumers are perceiving the new president's economic agenda, watch this video:

As Americans become more divided in the types of news and opinion content they consume, it’s possible the consumer confidence metrics will become more volatile. Researchers at Washington University in St. Louis hypothesized last year that perceptions of the national economy are often shaped by the types of opinion leaders and media Americans consume, whereas partisanship has a lesser impact on their perception of their household’s economic conditions.

Curtin said that although the current gap is unprecedented, he expects it to narrow. “This is a unique situation that reflects the presidential election and its result, and I expect it to fade over time,” he said.

For now, mind the gap in the various consumer confidence metrics.

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