It’s the Economy Stupid or Is It?

It’s the Economy Stupid or Is It?

AWalter Head
December 7, 2017

There are two ways to look at the role of the economy in 2018. On the one hand, a strong economy – defined by a surging stock market, low unemployment, and high consumer confidence – should give Republicans a tailwind. If the economy keeps on a steady climb in 2018, Republicans can cite the tax legislation and a loosening of the regulatory environment for its success. Finally, even voters who aren’t big fans of President Trump, often cite his “business background” and experience as one of his few (or only) assets. However, there’s also reason to believe that a growing economy – or at least a healthy economy – won’t be enough to boost Republican fortunes in 2018. If people are so happy about the economy, why isn’t it translating to stronger support for the president? And, then there’s the tax bill that – at this point – is also deeply unpopular.

Furthermore, we know that the economic numbers are masking deeper anxiety that Americans have about their own financial situation. After all, didn’t we just spend the first half of 2017 criticizing Hillary Clinton for her ineffective messaging on this issue? Reporters are still poking around the rusted out middle of the country to tell us stories of the left-behind Americans who have not seen the economic rebound enjoyed by "elites" on the Acela corridor.

The first thing you notice about Trump’s job approval rating is how far it lags behind consumer sentiment. The Michigan Consumer Sentiment measures the mood and expectations of the American consumer. In October, consumer sentiment was at 100.7, the highest (read, most positive) it had been since 2004. On average this year, 50 percent of Americans say that their current economic situation is better today than it was a year ago. The last mid-term election year when 50 percent or more of Americans were this positive about their own economic standing was 1998. A CBS poll taken December 3-5, found 64 percent of Americans rated the economy as "very good" or "fairly good."



Even so, Trump’s not getting any sort of "economic bump" in his own standings. The October NBC/Wall Street Journal poll found Trump’s overall approval rating at 38 percent. The Washington Post/ABC poll taken late October – early November put Trump’s approval rating at 37 percent overall, while CBS' early December poll put Trump's  job approval rating at 36 percent.

Trump did get higher marks, however, for his handling of the economy. In the NBC/Wall Street Journal poll, 42 percent approved of Trump's handling of the economy, a four point improvement of his overall approval rating. In the Washington Post/ABC poll, Trump's economic approval rating was eight points higher than his overall job rating (44 percent to 37 percent). While the CBS poll found Trump's economic approval rating 6 points higher than his job rating (42 percent to 36 percent). 

During his first midterm election in 2010, President Obama had the opposite problem. Voters disapproved of the job he was doing on the economy more than they disapproved of him overall. In his second midterm election in 2006, George W. Bush was underwater in both overall job approval and economic approval. Still, consumer confidence in 2006 and 2010 was not nearly as strong as it is now.


Trump

Month/Year
Overall Job Approval
Economic Approval
Michigan Consumer Sentiment
April 2017 40/54 (-14) 44/46 (-2) 97
June 2017 40/55 (-15) 44/48 (-4) 95.1
September 2017 43/52 (-9) 41/36 (+5) 95.1
October 2017 38/58 (-20) 42/37 (+5) 100.7

Obama

Month/Year
Overall Job Approval
Economic Approval
Michigan Consumer Sentiment
March 2010 48/47 (+1) 47/50 (-3) 73.6
June 2010 45/48 (-3) 46/50 (-4) 76
September 2010 46/49 (-3) 42/54 (-12) 68.2
October 2010 47/49 (-2) 43/53 (-10) 67.7

Bush

Month/Year
Overall Job Approval
Economic Approval
Michigan Consumer Sentiment
March 2006 41/58 (-17) 48/51 (-3) 88.9
June 2006 38/60 (-22) 38/61 (-23) 84.9
August 2006 40/58 (-18) 39/59 (-20) 85.4
October 2006 39/60 (-21) 41/56 (-15) 93.6

The other unique factor working in Trump’s favor is that many voters, even those who don’t like him, believe that he’s got the business acumen and skill set needed to grow the economy. At a recent bipartisan focus group of North Carolina voters conducted by renowned pollster Peter Hart for Emory University, seven of the twelve gave Trump high marks on the economy. Yet, almost all – even those that voted for him – dislike his conduct, especially on Twitter. Katrina, a small business consultant and non-Trump voter in 2016, summed up this tension many voters feel between happiness over a healthy economy and distress over Trump’s behavior:

I think Trump, honestly, from a very business perspective had some good things that he could have brought and could bring to this country and I see why a lot of people voted for him...I get that. But his approach, however, I don't understand why anybody voted for him. He's a good idea. But everything that he personally stands for as a human being. That to me just negates me even thinking about voting for him.

That is the essential question: do voters choose to give him credit for a healthy economy or choose to focus on his erratic and divisive behavior? In other words, should we look to Trump’s overall job approval rating, or his approval rating on the economy as the more accurate representation of the president’s standing with voters?

Finally, there’s the question of just what drives economic optimism. As the researchers at the University of Michigan have reported, partisanship is as big a driver of one’s feelings about the state of the economy as any tangible signs of economic strength. For example, back in October of 2016, when a Democrat was president, Democrats felt much more optimistic about the economy (102.1) than Republicans (74.4). By February of 2017, with a Republican in the White House, Republicans suddenly felt euphoric (115.7) and Democrats were down in the dumps (77.5). Over the course of just four months, with no significant legislation or event, Republican views of the economy improved by 41 points and Democrats’ perception of the economy dropped 24 points. Independents did not swing as violently from 2016 to 2017 but they have been showing a consistent uptick in optimism throughout 2017.The most recent CBS poll found that 62 percent of independents rated the economy as "good." 

Elections are driven by the fundamentals. And, nothing is more fundamental to voters than the health of the economy. In 1998, even at the height of the Monica Lewinsky scandal and the impeachment proceedings, President Clinton enjoyed job approval ratings in the 60’s. Why? Voters determined that a good economy superseded their personal feelings about Clinton’s behavior. This year, voters give Trump low marks on job approval, even as they give the economy higher marks. The enduring question for this president is which number accurately reflects how voters will ultimately judge him? Will they continue to express disapproval of his presidency, but ultimately choose to vote on the basis of their more positive feelings on the economy? Or, will they give Trump some credit for the economy but determine that his behavior is the more important variable in their vote?