Posted 4:54 PM by Robert

Polls As Lagging Indicators

This CBS story gives a remarkably negative spin to the most recent CBS poll.

Buried within the negative rhetoric is some fairly interesting material. For example, there's this:

Despite new economic data showing a lower unemployment rate and the recent stock market rebound, the economy and jobs continue to top the list of pressing concerns for the public. Although Americans?’ views of the state of the economy are more positive than they were a month ago, almost a quarter of Americans have had a personal experience with economic woes, and report that someone in their household has lost a job in the last year.

It is not surprising that people don't massively and all at once reverse their opinions of a president and the economy. But the inclusion of that reference to those who report that someone in their household has lost a job in the last year is interesting. Of course, the president isn't up for election now. He's up for election in just about a year. If one asks voters in November 2004 about the economy and the President's performance, many of them will likely look back about a year - to the time that 7.2% annual GDP growth rate was reported and unemployment fell to 6%. So that reference to a one-year look back doesn't bode well for the President's opponents and critics.

The story also almost obscures the facts that the number of people rating the economy's condition as "good" increased by 5% (from 45% to 50%) in just one month, while the number of people rating the economy's condition as "bad" declined 6% (from 54% to 48%) in that same month. Even more amazingly, these poll result occurred even though only about a third of Americans now view the economy as improving - even though the economy obviously is improving, generally and on the employment front. It seems highly likely that the objectively improving economy will touch the subjective understandings of more and more Americans within the next few months.

The reader is invited to peruse the most recent CBS poll results and associated stories for herself. I find them some of the more amusing recent examples of what Mickey Kaus calls "liberal cocooning."

But I'm fairly certain that any knowledgeable Democratic activist or consultant seeing these poll results is going to feel ill. Very, very ill.

I'm fairly certain of that because this and other polls show how the public is responding very well to the newer positive economic data, and that data is just beginning to flow in earnest and will almost certainly continue to flow at least until the November 2004 election. For example, the Wall Street Journal reports:

Economists are nudging higher their projections for economic growth early next year, suggesting they are becoming more confident the recovery is sustainable.

Among 53 economists who participated in The Wall Street Journal Online's November economic-forecasting survey, the average forecast for the inflation-adjusted, annualized growth rate of the nation's gross domestic product during the first quarter of 2004 was 4.1%. That was revised up from the 3.9% rate predicted when the group was last surveyed in October. .... The economists expect growth to remain steady throughout 2004. Offering second-half forecasts in the Online Journal survey for the first time, they forecast growth at a 3.9% rate for both the third and fourth quarters of 2004.

While a slowdown from the 7.2% growth rate the economy experienced during the summer, these 4% growth rates mark a notable acceleration from the pace of activity that prevailed during the first 19 months of the recovery, which started in November 2001.

Among the biggest reasons economists cited in ratcheting up forecasts was a rebound in business spending, which economists predicted would grow at a robust 10% rate for the next nine months. ... For weeks now, sustainability has been the buzzword hanging over the outlook for the economy. .... Economists noted that with business inventories low, companies now must turn to increased production to meet consumer demand. Robust productivity gains, they said, are expected to boost corporate profits and companies will need to replace aging equipment such as computers and software.

Moreover, they said the effect of tax cuts hasn't yet faded. Nearly two-thirds of economists surveyed said that the effects of the tax cuts will continue to have a significant impact on economic growth over the next 12 months, while 7.7% said tax cuts would be the primary driver of growth over that period. More than 17% said that tax cuts will have some effect, but not a meaningful one, in the next year, while only 1.9% said tax cuts would have no effect. ...

The nation's healthy pace of growth, in turn, is expected to create enough jobs to bring the unemployment rate down slightly in the months ahead. Economists nudged down their forecasts for the unemployment rate to 5.8% by next May, from previous estimates of 5.9%.

Of course, if the unemployment rate continues to decline in that way, it will be about where (maybe a bit less than) it was in October 2002 - just before the last national elections. And I'm sure the Democrats are thinking long and hard about how well they did then.

But all that economic and employment growth isn't expected to produce an interest rate crisis or draconian Fed action of the type the Times has been pining for recently. No. Instead, the Federal Reserve will likely begin tightening monetary policy sometime next year. Nearly half of those who responded said the Fed would lift interest rates by June 2004, and most pegged the increase at a quarter point, which would boost the central bank's target for the federal-funds rate, which banks charge each other for overnight loans, to 1.25%.

Yes. Ill. Very, very ill.

UPDATE: And this wouldn't make me feel any better, especially the lead GWB has already over every single Democratic hopeful.