FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
February 26, 2019

IN THIS ISSUE:

1. Gallup: Americans’ Economic Approval at 18-Year High

2. Americans Strong on Economy, Weak on Direction of Country

3. Liberal “Identity Politics” Running Rampant in America

4. Initial 4Q GDP Report Due Out Thursday, Expected Lower

Gallup: Americans’ Economic Approval at 18-Year High

A new Gallup poll released over the weekend showed 57% of Americans believe the US economy is either “excellent” or “good,” the highest reading in 18 years. That’s up from only 49% in January when the government was partially shut down and just following the stock market meltdown in December. The latest readings are from a February 1-10 poll.

Although Americans' perceptions of the job market have been positive for the past year, a record 69% said in February that now is a good time to find a quality job – the highest it has been since Gallup first asked the question in 2001.

Americans Strong on Economy, But Weak on Direction of Country

Yet despite all the heightened positivity about the US economy and jobs, Americans remain entrenched in their negativity about the general direction the country is going. Only 29% said they are satisfied with the way things are going nationally, while 69% were dissatisfied (3% were undecided) in the latest Gallup poll. Partisan opinions on this question diverge sharply: 51% of Republicans, 27% of independents and only 10% of Democrats are satisfied.

Lots of other pollsters ask a similar satisfied/dissatisfied question regarding the direction the country is headed. The latest RealClearPolitics average of 10 polls shows 35.4% believe the country is headed in the “Right Direction” while 57.8% believe we’re on the “Wrong Track.” That’s a little better than the Gallup poll above, but both raise some interesting questions.

Does it puzzle anyone but me that a majority of Americans polled (57%) believe the economy is either excellent or good, and over two-thirds (69%) believe the jobs market is very strong, while only about a third (35.4% or less) believe the country is headed in the right direction overall?

If you ask most members of the mainstream media why this is, they’ll say it’s because most Americans hate or dislike Donald Trump. That’s what they would like us to think. But as you can see in the chart above, a large majority of Americans polled feel the country has been headed in the wrong direction for years. This reading hasn’t been above 50% for almost a decade – long before Trump was elected.

In fact, as we’ll see in the chart below, Americans’ satisfaction with the direction the nation is headed has plunged since 1999/2000 when 71% of Americans were optimistic about the direction our country was headed. Here’s the question Gallup asks for this particular poll:

“In general, are you satisfied or dissatisfied with the way things are going in the United States at this time?” Now take a look.

Obviously, this poll can be very volatile, ranging from 26% in 1980 to 71% in 1999 to only 7% in 2009. Since then, the highest reading was 38%, and the latest reading earlier this month was 29% (not shown).

The question is, why?

First, some general observations. Satisfaction with the direction of the economy went down under President George H.W. Bush (1989-1993). Satisfaction rose sharply during President Bill Clinton’s time in office (1993-2001). Then satisfaction plunged under President George W. Bush (2001-2009) to a record low of only 7% in 2009 at the end of the Great Recession. It recovered in the first year of Barack Obama’s presidency (2009-2016), only to fall again – and has more or less gone sideways since then.

There are many reasons why the public’s satisfaction/dissatisfaction with the direction the country is headed changes, often significantly, with who is in the White House being one of them. Record high household debt is another: record high credit card debt, student loan debt and auto debt, just to name a few. More and more Americans are realizing they will never be able to get out of debt, which no doubt skews their feeling about the direction of the country.

What stands out most to me in the chart above is the fact that satisfaction has not been above 50% since late 2003, over 15 years.

I believe that the main reason for this is the escalating partisan divide we’ve seen develop over the last decade. Americans are more divided than ever! Most Americans blame partisan politics in Washington and distrust politicians across the board. Public approval of Congress has been in the tank throughout the current 10-year economic recovery. People are disgusted that lawmakers can’t work together to get much more done in Washington.

Liberal “Identity Politics” Running Rampant in America

Another reason I believe so many Americans are unhappy about the direction the country is headed is the alarming rise in “identity politics” in recent years. I’m sure most of you reading this have heard this term. Yet in preparing to write this, I asked numerous colleagues and friends if they knew what the term identity politics means. With only one exception, no one I asked knew what it means.

The term identity politics in common usage refers to a tendency of people sharing a particular racial, religious, ethnic, social or cultural identity to form exclusive political alliances with like-minded people to promote or defend their particular interests, without regard for the interests of larger political groups.

In this usage, identity politics typically tries to reclaim greater self-determination and political power for marginalized groups (mostly minorities) through understanding their distinctive nature and challenging externally imposed characterizations – instead of organizing solely around belief systems or party affiliations. Identity politics today is largely engaged in by liberals.

Identity is used as a tool to articulate political claims, promote political ideologies and formulate political action with the aim of asserting group distinctiveness, gaining power and recognition in the context of perceived inequality or injustice. Here are two examples.

The “Black Lives Matter” movement sprang from a series of well-publicized police killings of African Americans and forced the rest of the world to pay attention to the victims of police brutality.

The “Me Too” movement arose on college campuses and in offices around the United States, with women seething over a seeming epidemic of sexual harassment and assault – and concluded that their male peers simply did not see them as equals.

Again and again, groups have come to believe that their identities – whether national, religious, ethnic, sexual, gender, or otherwise – are not receiving adequate recognition or benefits, especially from the government.

Identity politics is no longer a minor phenomenon, playing out only in the rarified confines of university campuses or providing a backdrop to low-stakes skirmishes in “culture wars” promoted by the mass media. Instead, identity politics has become a master concept that explains much of what is going on in global affairs.

That leaves modern liberal democracies facing an important challenge. Globalization has brought rapid economic and social change and made these societies far more diverse, creating demands for recognition on the part of groups that were once mostly invisible to mainstream society.

These demands have led to a backlash among other groups, which are feeling a loss of status and a sense of displacement. Democratic societies are fracturing into segments based on ever-narrower identities, threatening the possibility of deliberation and collective action by society as a whole. This is a road that leads only to state breakdown and, ultimately, failure. I’ll have more to say on this topic in the weeks to come.

If you want to know more about identity politics and the danger it poses, be sure to read the article by David Azerrad of the Heritage Foundation entitled: The Promises and Perils of Identity Politics. It is eye-opening to say the least!

Initial 4Q GDP Report Due Out Thursday, Expected Lower

The Commerce Department will release its advance estimate of 4Q GDP on Thursday morning. Normally, this report would have been released at the end of January, but because of the government shutdown, it (like many other government reports) was delayed until this week.

Most forecasters believe the economy slowed significantly in the 4Q due to the plunge in the stock market, fears of a government shutdown and growing concerns about a trade war with China. The pre-report consensus is that 4Q GDP will come in at only 2.0%, down considerably from 3.4% in the 3Q and 4.2% in the 2Q. Some forecasters believe it will be even lower.

If Thursday’s GDP report comes in at the consensus of 2.0%, that will mean economic growth for all of 2018 will have been just slightly below 3% (2.95%). Still, that will be the best annual growth in almost a decade.

Thursday’s report is expected to show slowdowns in consumer spending and business investment in the 4Q. Consumers and businesses are the two largest pegs in the US economy. While the economy clearly slowed toward the end of last year, more recent evidence suggests that growth has stabilized.

Hiring soared in January, for instance, layoffs have fallen back near post-recession lows and the number of unfilled jobs hit a new record high last month. The strong labor market is likely to keep households spending at a steady clip and prevent business investment from falling off a cliff.

I expect to have some comments and analysis on the GDP report in my Blog on Thursday.

Best regards,

Gary D. Halbert

SPECIAL ARTICLES

Consumer Confidence Rebounds in February

Gallup: Economic Confidence & Trump Approval Rebound

Gary's Between the Lines blog: Fed Says It Will Be "Flexible" On Monetary Policy

 

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