First, I wish all veterans a respectful and thoughtful Veteran’s Day as we contemplate the role, readiness, and leadership of our nation and its responsibility to its citizens, to those people of goodwill who aspire to become citizens, and to those around the world who still hold the traditional promise of American democracy as a noble ideal. – David Kotok, Captain, US Army, 1966–1969.
We recently mentioned the University of Michigan sentiment survey data in our commentary, and a reader sent in this observation:
I have recently read, but I don’t remember where, that the Michigan survey has recently significantly increased its share of reported Democrats at the expense of Republicans. As these two groups have sharply different views on what’s going on (and just sentiment), that might explain the sharp drop in Michigan sentiment recently.
I’m keeping the writer anonymous. I have deep respect for his integrity and professional skills and therefore wanted to see if there is merit to this observation. So, we asked Philippa Dunne and Doug Henwood of TLR. They are the experts, in my opinion. I read TLRWire and TLR on the Economy regularly and have found them a great value. I recommend their service to readers.
I believe this missive below from TLR provides the answer to the reader’s question. In my opinion, University of Michigan survey data is of very high quality and quite useful for investors and analysts.
Now here’s TLRWire.
Tracking University of Michigan’s political trends
Since 2017, when a large divide opened up between Republican and Democratic assessments of the economy, the University of Michigan has tracked party responses every month. In the past that tracking was intermittent, and we started the graph below in 2017 to avoid a big data gap. It’s normal for members of the party in office to be more confident, but in the last days of George W. Bush’s presidency, Republican confidence was twenty points above Democratic, with Independents running in between, and following President Obama’s election, the tides turned to roughly the same split.
When President Trump took office in 2017, Republican expectations doubled, to 120, from October 2016’s level, Democratic expectations fell forty points to 55, while Independent assessments of the future rose sixteen points to 89. (Expectations tend to be more extreme, so we’re using that metric.)
Below are the more recent trends. Some media outlets are emphasizing the current weakness in Democratic sentiment, and it is weak indeed. But please note that since the beginning of the year Democratic and Independent metrics are traveling together, with both now at their all-time lows.
Since 1980, overall Republican sentiment has ranged between 33 and 127, Democratic between 34 and 107, and Independent, between 46 and 103.
Philippa Dunne & Doug Henwood
In an October 28 email conversation, Philippa noted that “the Republican trend seems to be the outlier following the convergence of Indy and Dem.” She then reminded me of this assessment from 2022:
In early 2022, Richard Curtin, then director of the UMich confidence survey, wrote that partisan views are now, “unfortunately,” completely dominating “rational assessments of ongoing economic trends,” which is encouraging “poor decisions by consumers and policy makers alike.”
More on TLR Analytics
TLR Analytics offers three different subscription publications, and I would encourage readers to look into each. All are briefly characterized below, but more information, including pricing, follows at the links provided. Philippa Dunne and Doug Henwood can help you with determining what service levels suit your needs and interests.
TLRWire
TLRWire delivers frequent, succinct posts on economic trends, including details not picked up in mainstream sources. Learn more at https://www.tlranalytics.com/subscriptions/tlr-wire/.
TLR on the Economy
In-depth macro analysis, “proprietary surveys of state-level withholding and sales tax receipts,” regular discussions with senior tax officials, and “meticulous dissection of federal data,” result in substantive reports that impart unique insights. For more information, see https://www.tlranalytics.com/category/tlr-on-the-economy/.
Sightlines
Sightlines comprises “two bulletins a month, one analyzing the trends and outlooks for employment and productivity, the other on trends and outlook for consumption,” both designed for business planners and developers. See https://www.tlranalytics.com/subscriptions/sigthlines/ for details.
