The Consequences of Partisanship in Economic Perceptions

We investigate the role of economic perceptions in macropolitical analyses, with a particular focus on the role that partisanship might play in shaping consumer sentiment. Instead of taking consumer sentiment at the fully aggregated level, as is customary, we disaggregate by party in order to see the effects of partisanship on over-time evaluations of the economy. Analyzing four presidential administrations' worth of public opinion data, we find that differences in Republicans' and Democrats' beliefs about the changing economy do not cancel in the aggregate. Furthermore, our macroanalysis shows that the endogeneity of consumer sentiment to partisanship leads to a clear overestimate of the role of consumer sentiment on approval of the president's handling of the economy.