It's Not the Economy Anymore, Stupid' -- 2nd Update

Date : 11/12/2019 @ 6:53PM
Source : Dow Jones News

It's Not the Economy Anymore, Stupid' -- 2nd Update

By Greg Ip 

President Trump has presided over solid economic growth and much lower unemployment than economists would have expected a few years ago, a record he proudly touted in a speech in New York Tuesday.

Mr. Trump is counting on that record carrying him to re-election next year. Conversely, Democrats see hints of weakness, especially in manufacturing-intensive swing states, that could derail those plans.

Yet both could be working from an outdated playbook. Polarized politics mean that voters' views of the economy are increasingly shaped by their party preference, rather than the other way around. And for some key voting blocs, noneconomic issues such as immigration, race relations and Mr. Trump himself have superseded economic concerns in determining their vote. Thus, absent a serious recession or spectacular boom, the economy may have little bearing on how Americans vote next year.

Last week's elections offered a hint of that growing divide. Republicans were routed in state and local elections in northern Virginia and local elections in the Philadelphia suburbs of Chester and Delaware counties, prosperous areas where unemployment has hit decade lows. Last year, Republicans lost control of the House of Representatives despite heading into the midterm election with strong economic growth driven by their tax cut. Yet in counties disproportionately dependent on manufacturing, a sector hit hard by the trade war and global slowdown, Mr. Trump's approval has risen, analysis of polling data by The Wall Street Journal has found.

To be sure, congressional, state and local elections may reveal little about the role of the economy in presidential contests. Ray Fair, a Yale University economist who has used economic indicators such as per capita income to predict presidential vote shares since 1980, said there isn't enough data to conclude their predictive power has weakened in recent years. His model currently predicts Mr. Trump will win next year if consensus economic forecasts hold true.

Yet there are signs economic trends' sway over presidential contests has weakened. Political scientists John Sides, Michael Tesler and Lynn Vavreck, authors of "Identity Crisis: The 2016 Presidential Election Campaign and the Battle for the Meaning of America," have found that from John F. Kennedy through George W. Bush, consumer confidence and presidential approval were positively correlated. But that correlation disappeared under Barack Obama and has been absent during Mr. Trump's three years in office. His approval rating has remained both unusually stable, and low relative to consumer confidence. "His approval numbers are 15 points lower than where you'd have expected them to be," said Mr. Sides, who teaches at Vanderbilt University.

One reason is that "partisan divides have put people into parallel universes when it comes to understanding and interpreting the economy," said Jonathan Rothwell, principal economist at Gallup. Republicans consistently rated economic conditions more poorly than did Democrats when Mr. Obama was president. Those attitudes flipped almost overnight with Mr. Trump's election. In August, 84% of Republicans were satisfied with the economy compared with just 36% of Democrats, the largest such spread since years five and six of George W. Bush's administration, according to polls conducted by NBC News and The Wall Street Journal.

"Each group has its own narrative about why GDP is up or down or why employment is high or low," Mr. Rothwell said. Voters can easily find "the story that matches his or her political preferences" amid all the information available.

Mr. Trump's ascendance in 2016 also marked a shift away from economics in voter priorities. Mr. Sides and his co-authors cite survey data to conclude that "race, ethnicity and religion" were more important than "economic insecurity" in driving support for Mr. Trump during the Republican primary. They also played a bigger role in the general election than in previous elections, they found. For voters who switched support from Mr. Obama in 2012 to Mr. Trump in 2016, "issues around race and immigration were more important than their own personal economic circumstances," Mr. Sides said.

Polls suggest economics will again take a back seat next year. Just 11% of voters rank any economic problem as the biggest problem facing the country now, according to Gallup, the lowest level in at least 18 years, while 34% cite government or poor leadership.

This doesn't prove the economy won't matter at all. When the economy cratered in 2008, economic assessments of Republicans and Democrats converged. Mr. Sides noted neither Mr. Obama nor Mr. Trump have been tested by an actual recession that began under their watch. Mr. Rothwell predicted that party platforms that cater to partisan Democrats' and Republicans' noneconomic priorities are apt to turn off independents. "There's room for a candidate to have a well-focused economic appeal to that group of people and do rather well."

In theory, even if economic conditions don't drive the national vote, they may do so enough in swing states to sway the election. An election model designed by Moody's Analytics combines state and national economic data with political indicators such as the president's approval to forecast the electoral college winner.

Yet after correctly predicting every election from 1996 through 2012 it wrongly called Mrs. Clinton to win handily in 2016. Mark Zandi, the firm's chief economist, said the model didn't capture how turnout trends in key industrial and Midwestern states would hurt Mrs. Clinton and help Mr. Trump. The model now incorporates turnout and predicts Mr. Trump will win if turnout is typical, said Mr. Zandi, "but I'd be surprised if it's typical."

Write to Greg Ip at greg.ip@wsj.com

 

(END) Dow Jones Newswires

November 12, 2019 13:38 ET (18:38 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.


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