Want an Accurate U.S. Economic Outlook? Ask an Independent
Independents have consistently held the most accurate outlook of joblessness.
(Bloomberg) -- Political independents have emerged as the most
accurate forecasters of the U.S. economy as partisan divides
skew the outlook of Republicans and Democrats.
That's the finding in a University of Michigan study released
Friday, which looked at how political allegiances have muddied
economic expectations of American consumers. It noted that
Republicans have consistently held a rosy outlook of the U.S.
economy since President Donald Trump's election in 2016, while
Democrats have proven decidedly more pessimistic.
“These reactions in response to the surprising election results
were initially discounted as transitory,” according to the
study by Richard Curtin, director of the school's consumer
sentiment survey. The phenomenon continued, however, as
“political divisions in economic expectations have persisted
largely unchanged at record levels during the past two years.”
For example, Democrats in early 2019 expected the jobless rate
to rise by 1.5 percentage point after expecting it to increase
by 1 point in early 2017. Republicans in 2019 expected
unemployment to fall 2.5 points after anticipating a 4 point
drop in early 2017.
Both sides have been way off. Unemployment went from 4.7 percent
in January 2017 to 3.8 percent in February of this year, a drop
of less than a percentage point.
Independents, meanwhile, have consistently held the most
accurate outlook of joblessness. The Michigan report notes
that's also true when you look at how the three groups view the
university's overall index for economic expectations.
“One might have anticipated that over the past two years both
Democrats and Republicans would have moderated their extreme
views on future economic prospects,” Curtin wrote. Instead,
“independents appear to have discounted both parties' slanted
rhetoric.”
©2019 Bloomberg L.P.