A Difference in Sentiment

Each Tuesday, ABC News reports its weekly Consumer Confidence Index, which gauges confidence in the state of the U.S. economy.

Not surprisingly, the CCI tends to track moves in other well known sentiment measures, including the Reuters/University of Michigan and Conference Board indexes, both of which are reported monthly.

However, the ABC data also includes a breakdown of sentiment by political affiliation, which yields some interesting results.

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For one thing, Republicans have consistently maintained more confidence in the the U.S. economy than Democrats over the past two decades.

I assume this reflects the fact that Republicans tend to be wealthier and thus have benefited more directly from the long-running economic boom and bull market in financial assets (up until recently, at least).

The other observation of note is how much the spread between the two indexes widened out between 2000 and 2008 (it has since moved back towards the 20-year median).

Some might put it down to growing income inequality, the dot-com and housing booms and busts, or the ongoing wars in the Middle East.

However, it seems to me that the more likely catalyst was the fact that President George W. Bush was in office, or that the Republicans were running the show in Washington — or both.

What do you think?

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