As Cliff pointed out in his earlier post Barack Obama’s chances for reelection are more reliant on the sentiment of the American Public (desire for change vs desire for continuity) than the tactics of the campaign. In upcoming posts, Cliff will further detail how he calculates the desire for change typology. Today I wanted to share some quick data on a single component, the economy and consumer confidence.
For the last decade, Ipsos and RBC have conducted a monthly consumer confidence study tracking the ebbs and flows of consumer sentiment about the U.S. economy. We just released our latest data this morning. The big story of the last decade was undoubtedly the great recession.
During the great recession, consumer confidence plummeted from an average around 55 in our index down to an average of 40. Since March 2009, consumer confidence has — fitfully — improved to an average around 45. So here we are now with consumer confidence better than it was, but still well below the average seen through most of the aughts.
This begs two questions: first, what factors influence consumer confidence and second, does consumer confidence have any impact on anything else (specifically the election). A closer look at the RBC Index does not reveal much.
President Bush “enjoyed” a very low approval rate long before the financial crisis began. President Obama’s approval rate began falling shortly after his inauguration even though consumer confidence was, generally, on the rise. This indicates that consumer confidence in the economy is not directly connected to consumer approval of the president’s job performance. If anything, it appears a certain type of event might actually be driving consumer confidence.
- In the fall of 2008, the Bush administration proposed major responses to halt the burgeoning financial crisis. For a brief period, the public believed that the crisis would be averted. However Lehman Brothers’ collapse and the controversy created by TARP resulted in the largest single-month drop in our index’s history.
- Obama’s inauguration corresponded with the bottom in consumer confidence. Shortly after he moved into the White House, Obama signed the Recovery and Reinvestment Act. Consumer confidence began improving even though the economy continued to shed jobs and lose GDP. This was the change moment in Cliff’s typology. Voters and consumers believed that the new administration would be able to fix the economy.
- Consumer confidence was barely affected by the most contentious political issues of 2009-2010 (the Affordable Care Act & Dodd-Frank), however confidence was profoundly shaken by the debt crisis that overtook Washington in the Summer of 2011. Over the course of two month (between June and August) confidence dropped to almost recession era levels.
This seems to indicate that while America can tune out most of what goes on in Washington, they are very interested in what DC does to the economy.
In my next post I’ll look into American consumer confidence within the context of the world economy. After that, we’ll tie confidence in with other metrics to show the impact on Presidential job approval.