Do you like Trump but not immigrants? You probably love the economy right now.
Partisanship is a hell of a drug.
Most Americans are anxious about the economy — six out of 10 say economic conditions will be “mixed” or “bad” over the next year. But it’s not hard to find groups that think an upswing is on the horizon, if you let politics be your guide.
More than seven in 10 Americas who think terrorism is the most important issue facing the country expect there will be “continuous good times economically” throughout the next five years. Americans who believe immigrants are bad for the US economy are similarly optimistic for the next five years, and more than half of them believe their financial situations will improve next year.
Views on immigration and terrorism, in other words, are good predictors of economic optimism. So are gender, age, income, and party affiliation. But the best predictor, by far, is the simple question of how Americans feel about Donald Trump.
These statistics come from a new project from Vox and SurveyMonkey that seeks to provide a deeper and more detailed look at the drivers of Americans’ economic attitudes than traditional confidence surveys.
Since January, we’ve been polling more than 9,000 Americans each month about their views on the economy. (The University of Michigan’s consumer sentiment surveys, by contrast, ask about 500 people a month.) Using our large samples and detailed questions, we can investigate not only how Americans feel about the economy but also what influences their opinions — chiefly, politics.
The result is the Vox/SurveyMonkey Economic Confidence Index, debuting today, which we’ll release monthly.
As others have shown, economic confidence leaped upward soon after Trump was elected in November. Our data reveals that those feelings haven’t budged much over the past five months — and neither has the partisan divide in economic perceptions. According to Democrats, the economy is in serious trouble; according to Republicans, the future is looking rosy.
These opinions all have real consequences. Our financial expectations affect how we save and spend, and all these individual choices, in turn, affect the trajectory of the economy at large. Right now, for instance, 46 percent of right-leaning Americans say it’s a good time to make major household purchases — but only 22 percent of left-leaning Americans agree.
Partisanship has long steered how people think about economy. It’s natural to be more optimistic about the future when our favored politicians are in power, and to despair when they are voted out. But in the age of Donald Trump, the divisions between us have never loomed so large.
As former Federal Reserve Chair Ben Bernanke told Vox earlier this month, those divisions are distorting Americans’ economic assessments.
“After the election, even though the economy is progressing more or less along the same track that it had before, we see that Republicans are much more optimistic about the economy, and much more upbeat about even the near-term economy, whereas Democrats are the reverse,” Bernanke said. “So we see this remarkably strong influence of partisan team membership on people’s perception of the economy.”
What’s really going on with the economy
When Trump took office in January, he inherited an economy that was, if not roaring, at least humming along. The unemployment rate had fallen to a remarkably low 4.8 percent, and poorer Americans were finally starting to see their wages creep upward.
But Trump had campaigned on promises of fabulous prosperity. He assured voters he would bring back the days of 4, maybe even 6 percent growth. At one point, he even claimed that under his leadership, the nation could pay down its entire $19 trillion debt within eight years.
So far, it seems that the only thing Trump has boosted is confidence among his supporters.
Which is a funny thing — after more than 100 days into Trump’s presidency, the economy hasn’t budged. Economic growth in the first three months, in fact, dipped to a rate of 0.7 percent, far below what Trump set out to achieve. The US economy is large and lumbering, of course, and it takes time for presidents to make course corrections. But Trump has made scant progress on the three main policies he claimed would supercharge the economy: tax reform, infrastructure spending, and renegotiating trade deals.
Instead, we’ve seen a familiar pattern of campaign fantasies colliding with reality. Trump’s solutions were always simple and sweeping — torching NAFTA or slashing business taxes. These kinds of ideas sound good in a stump speech, but as the president has repeatedly discovered, the nation’s affairs are far too complex to be straightened out by his sound bite style of governance.
Nevertheless, Republicans continue to have faith that Trump will somehow make good on his promises to make the economy “great again.” Our polling reveals that above all, partisan affiliation and Trump approval are the most important factors in predicting how Americans feel about the nation’s economic circumstances.
On a scale of 0 to 100, where 0 represents complete pessimism and 100 represents complete optimism, left-leaning Americans rate the economy in the low 40s on average, while right-leaning Americans rate it in the mid-70s.
Our latest numbers come from early May, before Trump’s recent trifecta of scandals involving the firing of James Comey, the sharing of state secrets with Russian diplomats, and the revelation that Trump may have interfered with the FBI’s investigation of National Security Adviser Michael Flynn.
The latest outpouring of bad news, which caused even some Republican politicians to distance themselves from the president, has created the conditions for a natural experiment. Political scientists have long observed that our perceptions of the economy are biased by our party loyalties. As of the middle of last week, about 78 percent of Republicans still approve of the president. But if this political controversy continues, more Republicans might start to change their minds about Trump — and maybe about the economy too.
Introducing the Vox/SurveyMonkey Economic Confidence Index
The Vox/SurveyMonkey Economic Confidence Index is calculated from a combination of five questions asking about people’s current finances, as well as their expectations for the near and distant future. SurveyMonkey poses these questions to more than 9,000 of its online participants each month, adjusting the sample to mimic a nationally representative population.
This index was developed by SurveyMonkey’s vice president for survey research, Jon Cohen, and research associate Laura Wronski in collaboration with reporters and editors at Vox.
Here were there five key questions, exactly as they were worded in the survey:
- Would you say that you and your family are better off or worse off financially than you were a year ago?
- Thinking about the big things people buy for their homes — such as furniture, a stove, a television ... generally speaking, do you think now is a good or bad time for people to buy major household items?
- Now, looking ahead — do you think that a year from now, you and your family will be better off financially, worse off financially, or just about the same as now?
- Now, turning to business conditions in the country as a whole — do you think that during the next 12 months we'll have good or bad times financially?
- Looking ahead, which would you say is more likely to take place in the next five years for the country as a whole? Continuous good times economically or periods of widespread unemployment or depression?
Each item was given equal weight. The first two questions asked about present economic circumstances. The third and fourth questions asked about people’s expectations for the near future. And the fifth question asked about people’s long-term outlooks on the economy.
(The Gallup Economic Confidence Index, by the way, uses two questions — one asking about the current economy, and one asking about the future economy.)
Democrats and Republicans had drastically different perceptions of the economy, a gap that widened on questions that asked about the future.
On each of the five questions, left-leaning Americans were consistently pessimistic. Over the short and the long term, Democrats think the economy is in rough shape. Only 20 percent of left-leaning Americans said they were better off financially than a year ago, and only 14 percent expect good economic conditions in the next year.
Republicans, in contrast, are pleased about the present and even more jazzed about the future. Nearly 80 percent of them believe the next five years will bring “continuous good times economically.”
Republicans were more hopeful about the nation as a whole than they were about their personal circumstances. About 68 percent said that business conditions overall would be good next year, but only 58 percent expected their family’s finances to improve.
In the coming weeks we’ll analyze this discrepancy further, but it aligns with what many political scientists believe, which is that in presidential elections, people vote not for personal gain but to help groups they identify with, or to lift up the nation overall.
That’s one theory, at least. For now, consider also the following chart, which shows that 87 percent of Republicans do believe that at some point, Trump’s economic plan will benefit them personally — with 46 percent overall believing it will “help very much.”
As expected, Democrats strongly disagree. About 82 percent of them think that Trump’s economic policies will hurt them personally, with only 15 percent of them believing he will help them. (As with any survey question, a small number of people declined to answer.)
Your politics predict your economic perceptions
By condensing those five questions about the economy into a single number, our index gives a broad sense of how people feel about their personal finances, and their outlook on the nation as a whole. As we’ve seen, partisanship and Trump approval are the factors that explain most of the story — but another way to look at the data is to group people by their policy preferences.
People who disapprove of NAFTA, for instance, are happier about the economy than people who disapprove of the free trade deal between the United States, Mexico, and Canada. People who believe that immigrants harm the economy are also more optimistic now than people who think immigrants benefit the economy.
The people who are happiest about economic circumstances right now are those who say that immigration or terrorism is their highest concern for the nation. The gloomiest are those who rank health care or the environment as the issues that matter most.
There are two ways to explain these patterns. Some of this is pure partisanship: People who are skeptical of immigrants and trade are also more likely to be Trump supporters, and therefore more likely to have faith in the president’s promises to improve the economy.
But of course, the president also promised economic growth, in part, by taking actions against immigrants and trade. If you believe that Mexican migrants are hurting American workers, you might also believe that Trump’s proposal to build a wall is essential to the nation’s economic well-being. The data shows that, to an extent, our political beliefs, our policy preferences, and our political perceptions are all intertwined.
Demographic characteristics, on the other hand, seem to be less important than people’s policy opinions. White, older, richer, and less educated Americans are more likely to think the economy is going well, but the differences between demographic groups are not as dramatic as the gap in economic confidence between Republicans and Democrats.
The stock market is another indicator of how people feel about the economy
One of the few bright spots in the Trump presidency was the stock market, which rallied after the election. And what is the stock market if not a huge index of how investors feel about business and the economy?
Wall Street, by and large, is a coolly rational place. Many investors believe that Trump’s tax plan would be great for corporations, even it doesn’t yield trickle-down benefits to average Americans. And they trust the president would bust up some of the financial and environmental regulations that CEOs often complain are eating into their profits.
Following this week’s revelations, though, the bullish mood on Wall Street has tempered. On Wednesday, major indexes like the Dow Jones Industrial Average and the S&P 500 tumbled by 1 to 2 percent, spooked at the political instability and the whispers of impeachment, analysts say.
“Trump’s agenda already had stalled; now there’s the likelihood that issues like tax reform will get crowded out by this political crisis,” Greg Valliere of Horizon Investments writes. Investors, in other words, are nervous because they are losing faith in Trump’s power to carry out the profit-friendly tax cuts and regulatory rollbacks he promised.
The question now is whether the recent scandals will also cause average Republicans to lose faith in the president — and whether they, too, will adjust their outlook on the economy.
Jim Tankersley contributed to this report.