Consumer confidence has been higher among Democrats than Republicans for a record 18 straight weeks, indicating that politics are driving perceptions of well-being.
Confidence among Republicans fell to minus 45.1 in the week ended July 22, 47.9 points below their long-term average, according to the Bloomberg Consumer Comfort Index. Among Democrats, confidence was at minus 27.8, two points lower than their long-term average, although it did fall 4.2 points from the previous week.
The current stretch of Democratic optimism surpassing that of Republicans is triple the previous record -- a six-week period encompassing the re-election of President Bill Clinton in November 1996. Republicans have been more hopeful than Democrats in data going back to 1990, in part because they tend to be more affluent, according to Gary Langer, president of Langer Research Associates in New York, which compiles the index for Bloomberg.
“Historically voters have looked at politics through an economic lens,” said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California in Los Angeles. “Now they’re looking at the economy through a political lens.”
Regardless of political affiliation, tepid job growth and unemployment stuck above 8 percent since February 2009 are hurting confidence, making consumers less likely to spend. The overall Consumer Comfort Index last week declined to minus 38.5, a two-month low, from minus 37.9, the survey showed.
“Household opinion on the state of the American economy remains mired in a deep funk that does not bode well for the spending outlook for the remainder of the year,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.
A separate report from the Labor Department today showed fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, extending a period of volatility typically seen in July.
Applications for jobless benefits decreased by 35,000 in the week ended July 21 to 353,000. Economists forecast 380,000 claims, according to the median estimate in a Bloomberg News survey. Changes in the annual auto plant shutdowns that occur this time of year have made it difficult to adjust the data for seasonal variations, the Labor Department has said.
U.S. stocks snapped four days of losses after European Central Bank President Mario Draghi pledged to preserve the euro and companies including 3M Co. and Visa Inc. posted better-than-estimated quarterly results. The Standard & Poor’s 500 Index climbed 1.7 percent to 1,360.02 at the close of trading in New York for the biggest gain in almost two weeks.
Republicans are especially gloomy about the economy now because of their unhappiness with the way President Barack Obama has handled it, Langer said. At the same time, Democrats are showing greater confidence because of their support for the president and his policies.
That’s not unusual, according to Langer. Democrats tend to be more cheerful during Democratic administrations, while Republicans are more hopeful when a member of their own party is in power.
Even so, the level of optimism among members of the two parties has tended to move in tandem. What has changed now, Langer said, is that the correlation has disappeared.
Since June 1990, the earliest breakdown available, the correlation has been 0.69, where 1 shows movement in lockstep and zero shows no relationship. Since Obama was elected in November 2008, the correlation has plunged to minus 0.11.
“It just seems like everything now is viewed more in partisan terms than in the past,” Jeff Jones, managing editor of the Gallup poll, said in a July 24 phone interview.
In the last two weeks, Democratic consumers’ optimism has outweighed Republicans by 17.3 and 18.4 points -- record gaps in the history of the data going back to 1990.
Democrats are likely to rally behind their party in public opinion surveys on concern that Republicans in control of the White House and Congress would dismantle social programs, said Steve Jarding, a professor at Harvard University’s Kennedy School of Government.
“There’s still a large segment of voters out there that want to believe government can be a good thing in your life,” Jarding, a former Democratic consultant, said in a July 23 phone interview.
Less than four months before the presidential election, Democrats are using questions on economic outlook, buying climate and personal finances -- which are used to calculate the Bloomberg index -- as a proxy for the ballot box.
“We wouldn’t see as strong a relation with consumer confidence and party in non-election years, but you definitely see it every four years,” Jones said.
The polarization also may be driven by the contrast in the presidential candidates’ platforms.
Obama and Republican Mitt Romney are promoting “two very different schools of economic thought,” said Schnur, an adviser to Senator John McCain, the 2008 Republican presidential nominee. “Almost everyone is unhappy with the current state of the economy, but they have dramatically different opinions on what it’ll take to improve matters.”
Independents, a group that both Romney and Obama have been competing for, have been more pessimistic than Democrats. The comfort index for that group was minus 45.1 in the week to July 22 and has averaged minus 39.2 in the past 18 weeks.
Reducing unemployment may be the key to broadening Obama’s support. Only one U.S. president, Ronald Reagan, has been re-elected since World War II with a jobless rate above 6 percent. On Election Day 1984, the rate was at 7.2 percent, having dropped almost three percentage points in the previous 18 months.
While the jobless rate declined to 8.2 percent in June from its peak during Obama’s term of 10 percent in October 2009, the drop has been slow and halting. It was stuck at about 9 percent through the first three quarters of last year.
“Obama’s very vulnerable on the economy,” Bruce Buchanan, a political scientist at the University of Texas-Austin who studies voter behavior in presidential elections, said in a July 19 telephone interview. “And yet we have some models where vulnerable presidents have managed to survive.”
The Bloomberg Consumer Comfort Index is based on responses to telephone interviews with a random sample of 1,000 consumers 18 years old and older. Each week, 250 respondents are asked for their views on the economy, personal finances and buying climate; the percentage of negative responses is subtracted from the share of positive views and divided by three. The most recent reading is based on the average of responses over the previous four weeks.
The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative. The margin of error for the headline reading is 3 percentage points.