Democrats are getting more bullish on the U.S. economy
The turn is coming — Democrats are getting more bullish on the U.S. economy.
According to the latest University of Michigan consumer sentiment survey released Thursday morning, economic optimism among Democrats — while still way below Republicans — is starting to edge higher.
The report’s economic expectations index remains near where it’s been over the last three months, but inside this number expectations for those on the left side of the aisle rose 7% while those on the right had expectations fall 7%.
As we’ve noted previously, the UMich survey has shown that overall consumer confidence remains near its highest levels since the turn of the century. And Thursday’s report showed that consumers’ assessment of current conditions is at its highest level since 2000 and near an all-time high set in 1999.
But the University of Michigan report has also outlined the divergence between Democrats and Republicans, and cautioned that this divide will 1) likely converge over time but 2) cause consumption to rise more slowly than the headline index could otherwise suggest.
“While partisanship had no impact on the Current Conditions Index (Democrats and Republicans differed by just 0.4 points), the data suggest the beginning of a convergence on the Expectations Index, with the figure for Democrats rising 7% and falling for Republicans by 7%,” said Richard Curtin, chief economist for the survey.
Curtin added that, “the gap still remained an astonishing 50.5 Index points,” and that, “more progress on shrinking the partisan gap is needed to bring economic expectations in line with reality.”
“A slow pace of convergence will make it more difficult to disentangle political fervor from what appears to be a growing sense among consumers that the economy will experience fundamental changes in the years ahead,” Curtin said. “It can be anticipated that optimism will commingle with uncertainty, causing uneven spending patterns across months.”
In a note to clients following the report, Ian Shepherdson, an economist at Pantheon Macro, said the report was, “very strong, but no significant further gain [are] likely.”
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Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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