For as long as I've covered politics, the conventional wisdom has been that presidents win re-election in good economic times and they lose when the economy stinks. Ronald Reagan won re-election when the economy was booming. Jimmy Carter lost when we sunk into economic "malaise." But, we also know that it's more complicated than that.

President George H.W. Bush lost in 1992, despite the fact that GDP growth that year was a healthy 3.2%. And, President Barak Obama won rather easily in 2012, despite the fact that GDP growth that year was a more anemic 2.2%.

It's also been long assumed that consumer confidence is one of the best ways to gauge voter perception of the economy. Forget what the economists and Wall Street analysts say, if voters are feeling optimistic — well the economy is doing well. If they are feeling pessimistic, the economy is reeling.

But, we also know that partisanship (especially negative partisanship) is an important driver in perceptions of the economy. Voters are less willing than ever to give the other party any credit for a good economy, or to hold their own party accountable in a downturn.

The Michigan Consumer Survey has done some fantastic work on exploring the issue of partisan differences in perceptions of the economy. Last September, the University of Michigan's Richard Curtain found that partisan differences in perceptions of the economy are larger than at any time in recent history.

Not surprisingly, the study found that "Republicans held more favorable expectations during the Reagan, Bush, and Trump administrations, who were all Republican presidents. During the Obama administration, Democrats held more optimistic expectations."

For example, during the Reagan administration, Republicans were on average, 11.5 points more optimistic about the economy, while Democrats were 7.4 points more pessimistic, for a gap of 18.9 points. That gap grew a bit during the George W. Bush and Obama eras; 20.9 to 23.9 respectively.

But, under Trump, that gap has turned into a chasm. The partisan gap now is 55.4 percent — twice as big as it was during Bush and Obama era and three times as big as it was during Reagan.


Curtain goes on to write that "[s]uch sharp and sustained partisan differences are not consistent with theories of rational expectations since all parties have access to the same economic information. Yet, Democrats still expect an imminent recession, and Republican anticipate much more rapid economic growth."

It's easy to assume that, like with so much else in the Trump era, 'rational expectations' have taken a holiday. But, Curtain isn't so sure that this is just about Trump. Instead, he finds that "job availability is a more longstanding cause of the partisan gap."

He goes on to write that "prior to the recent decade, the response trends for those with a high school education or less, some college, and a college degree had shown nearly identical trends." Michigan Consumer Index data on perceptions about job availability from 1978 to 2008, show very little difference in perceptions about employment among those with a college degree and those without. When those with a college degree were feeling optimistic about the job situation, so were those without a degree. And, when things started to look bad for those without a college degree, those with a degree also started to feel pessimistic. But, starting post-2008, those perceptions started to change. From 2008 until 2016, those with college degrees were feeling more optimistic than those with lower levels of education.

Since Trump's election, however, "the largest relative gains were recorded by the two lower education groups," while optimism among the college-educated slumped. In fact, for the first time since 2008, those with college degrees were more pessimistic about the employment situation than those without a degree.

Ultimately, concludes Curtain, "the prime economic issues responsible for the persistence of the partisan divide are wage stagnation and income inequality." 

However, we also know that during this same period (from 2008-2016), the Democratic party has become more associated with white, college-educated voters, and Republicans with white, non-college voters. One way to explain this post-2008 shift in University of Michigan data comes from the Atlantic's Ron Brownstein:

"From the mid-1990s to 2008, the diploma divide was small, if not negligible. Even though the Democrats had become the party of civil rights and a broad, multicultural coalition, they were also still the party of unions, which were largely made up of non-degree-holding whites. Therefore, white people with and without college degrees were equally as likely to be Democrats or Republicans.

But in 2008, the election of Barack Obama, a black man, signaled that the Democrats were becoming the party of progressive racial politics. "Obama's presidency simplifies the politics of race," Michael Tesler, an associate professor of political science at UC Irvine, says. "If you were a low-educated white, you were much more likely to know about the partisan differences on race [after Obama] than you were before." That change didn't show up in the party-affiliation data right away, but that's common, Tesler says. It often takes more than one election for people to switch their party identification. But by 2012, white voters without a college degree were distinctly more likely to vote Republican than those with college degrees."

In other words, Curtain is right that "wage stagnation and income inequality" are huge factors in the partisan divide. But, as Brownstein notes,  this is because those white voters with a college degree are more likely to identify as Democrat and those (white voters) without a degree as Republican. So, when non-college voters said they were feeling pessimistic about their job prospects during the Obama-era, but became more optimistic post-2016, it's not because Trump was able to 'solve' the income inequality gap. Instead, they are more optimistic now because a Republican is in the White House. 

This is also the conclusion reached by political scientists John Sides, Michael Tesler and Lynn Vavreck, In their book "Identity Crisis," they contend that issues of identity were more central to Trump's victory than the issues of so-called economic anxiety. "Attitudes concerning race, ethnicity and religion were more strongly related to how Americans voted in 2016 than in recent elections. By contrast," they write, "the apparent impact of economic anxiety was much smaller and not particularly distinctive compared to earlier elections."

This also helps explain why those living in some of the swankiest zip codes are the most resistant to Trump-ism, while those even in areas that have been hit hard by Trump policies like tariffs, continue to support him.

So, which is going to be a more important variable in 2020: the economy or identity? The answer is both. I know that sounds kind of like a cop-out answer. But, if we've learned anything from these last two presidential elections (2012 and 2016), it's that we can't have a simple "Economy election" that is separate from partisanship and identity.

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