Throughout 2024, consumers have repeatedly expressed that their expectations for the economy hinge on the results of the upcoming presidential election.
Consumer views of the economy incorporate who, at the moment, consumers expect the next president will be. Some consumers say that if their election expectations don't come to pass, their expected trajectory of the economy would be entirely different, said U-M economist Joanne Hsu, director of the surveys.
To understand the relationship between the election and consumer views of the economy, the Surveys of Consumers have historically asked about which candidate consumers believe would eventually win the election, not their preferred candidate or for whom they intended to vote.
What do consumers expect?
Interviews since July 23 reveal that about 58% of consumers expect Kamala Harris to be elected president this November, while 34% expect Donald Trump to prevail.
Other questions asked which candidate consumers believed would be better for the economy and for their own finances. About 41% of consumers reported that Harris would be better for the economy, compared with 38% reporting Trump; 15% of consumers believed it would make no difference.
For personal finances, the two candidates are virtually tied, with 19% believing it would make no difference. For both factors, the "no difference" shares are considerably smaller under Harris and Trump than they were when Joe Biden was still the nominee.
As discussed in the February 2024 report on partisan perceptions and expectations, party identification shares on the Michigan surveys are consistent with national surveys focused on political issues.
The anticipated alignment of expectations along partisan lines by Republicans and Democrats is clearly visible. Notably, Independents, who will cast deciding votes in the election, are more likely to expect a Harris win than a Trump win: 57% vs. 37%.
"They are also more likely to report that Trump is a better candidate than Harris for the economy as well as personal finances," Hsu said. "At the same time, substantial shares of Independents report no differences between the two candidates for these factors; 27% for the economy and 30% for personal finances. In contrast, among the three political groups, Republicans are the least likely to report no differences between the candidates for the economy or personal finances."
Age and education differences
Consumers under the age of 45 as well as those 65 and older preferred Harris over Trump as the better candidate for the economy and personal finances. Middle-aged consumers between ages 45 and 64, in contrast, preferred Trump for the two factors.
Younger consumers were around twice as likely as middle-aged and older consumers to report no difference between the two candidates. Patterns by education and income were similar to each other. More educated or higher income groups were more likely to expect a Harris win; they were also more likely to believe that Harris is better for the economy.
Economic sentiment and elections
"As discussed in our September 2020 report on election expectations, the pattern set from the 1950s to 2008 indicated that when the Sentiment Index was near a cyclical peak, the incumbent won re-election, or the candidate from the same party as the current president won," Hsu said. "Conversely, when the Sentiment Index was near its cyclical trough, the incumbent presidents lost-Reagan defeated Carter in 1980, and Clinton won over Bush in 1992."
At first blush, the 2000 and 2016 elections may appear inconsistent with the general pattern, according to Hsu.
"In fact, the patterns held both years for the popular vote, but both popular vote winners were defeated in the Electoral College tallies," she said. "Indeed, sentiment reached its all-time historic high in 2000, when the final year of Bill Clinton's term began, and Al Gore won the popular vote. Similarly, in 2016, sentiment was also near a cyclical peak when Barack Obama's second term was ending, and the Democratic nominee won the popular vote that year as well."
Sentiment trends during this current election season bear some resemblance to 2012. The 2012 election occurred 41 months after the end of the Great Recession. The 2024 election will occur 43 months after the end of the pandemic recession. With the benefit of hindsight, the 2012 election occurred when sentiment was midway between a cyclical peak and a cyclical trough.
In September 2011, sentiment hit its lowest point since the Great Recession, followed by a sharp climb the rest of the year. Obama's victory over Romney in 2012 came on the heels of relative stability in sentiment leading into the election.
Looking at the current cycle, sentiment hit an all-time low in June 2022 amid heightened inflation, Hsu said. Since then, sentiment has been on an overall upward trajectory and is now 40% above that trough, though the second and third quarters of 2024 have seen relatively little movement.
"Furthermore, sentiment remains below its historical average, which suggests a cyclical peak may not be imminent. However, sentiment has risen in recent months, even amid election uncertainty. Still, consumer expectations are subject to change as the presidential campaign comes into greater focus."
