Friday, November 25, 2016

Will newly confident GOP voters actually start spending more?

 - by New Deal democrat

I ran across the following graph at a Doomer website I occasionally check:  

So, are Happy Days Here Again because of Trump?
Well, first of all, the article noted that Gallup had found a profound difference in the changes in confidence between democrats and republicans:

Democrats' confidence declined by 15%, but GOP confidence soared by over 30%!
The real question is, does this translate into actual spending?
We have been here before.  Back in early 2013, I wrote that spending by affluent democrats may have been boosting the economy.  Here's what I said then: 
So the first thing I noticed is that the dividing line between upper income consumers and the rest is $90,000 annual income. David lives in southern California, so he may not be aware, but the only way somebody with a $90,000 income is getting into a home in the Hamptons is as a caterer or landscape contractor.
But the next thing that got my attention, being a total data nerd, is that big spike upward in the confidence of the lower 75% back in September 2012, that continued upward through November and seems to have had a lasting effect. So I did some searching of archived Gallup reports, and lo and behold, Gallup found a very specific reason for that spike:
Because the Gallup Economic Confidence Index is based on daily tracking of consumer attitudes, we can pinpoint the day that confidence increased. That day was Sept. 4, the first night of the Democratic National Convention. [NDD note: the night of Bill Clinton's keynote address] After averaging -27 in August, and registering -28 on Sept. 3, the Gallup Economic Confidence Index jumped to -18 on Sept. 4, and has mostly remained at or near that improved level.
Here's the graph from that time:

If you go back to the first graph above, you can see that 10% increase in late 2012 that I wrote about in 2013.  In fact, you can also see a transitory 20% spike when Obama was elected in 2008.

In 2013 the economic confidence of (especially affluent) democrats translated into actual spending, according to Gallup:

My suspicion is, the current spike will fade as did the one in November 2008.  But the bottom line is, it will actually be a positive if the newly confident GOP voters actually start spending more.