(Bloomberg) -- Political independents have emerged as the mostaccurate forecasters of the U.S. economy as partisan dividesskew the outlook of Republicans and Democrats.
That's the finding in a University of Michigan study releasedFriday, which looked at how political allegiances have muddiedeconomic expectations of American consumers. It noted thatRepublicans have consistently held a rosy outlook of the U.S.economy since President Donald Trump's election in 2016, whileDemocrats have proven decidedly more pessimistic.
“These reactions in response to the surprising election resultswere initially discounted as transitory,” according to thestudy by Richard Curtin, director of the school's consumersentiment survey. The phenomenon continued, however, as“political divisions in economic expectations have persistedlargely unchanged at record levels during the past two years.”
For example, Democrats in early 2019 expected the jobless rateto rise by 1.5 percentage point after expecting it to increaseby 1 point in early 2017. Republicans in 2019 expectedunemployment to fall 2.5 points after anticipating a 4 pointdrop in early 2017.
Both sides have been way off. Unemployment went from 4.7 percentin January 2017 to 3.8 percent in February of this year, a dropof less than a percentage point.
Independents, meanwhile, have consistently held the mostaccurate outlook of joblessness. The Michigan report notesthat's also true when you look at how the three groups view theuniversity's overall index for economic expectations.
“One might have anticipated that over the past two years bothDemocrats and Republicans would have moderated their extremeviews on future economic prospects,” Curtin wrote. Instead,“independents appear to have discounted both parties' slantedrhetoric.”
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