Kabuki & Politics; Perception & Reality

[dcarrigg]

Interesting thing is happening right now with a lot of econ data. It's getting more polarized than ever along with politics. I mean, partisans always estimate the economy (and consumer confidence) as being better when a Pres from their party is in office. And Republicans have always been about 10 points more positive about the economy than Democrats on average.

But take a look at consumer confidence today broken down by political party. Right now the spread is about 30 points--as big as it has ever been. Republican consumer confidence is the highest in history. Democrat consumer confidence is unchanged since 2014. Got a whiff of this in the W. Bush years. It's just nuts this time around.

Only point is, when the top line Consumer Confidence numbers are released and talked about publicly, it hides this fact. Republicans are more amped about the economy than ever in American history. More than at the peak of the dot com bubble. More than at the peak of the housing bubble. Democrats see it slightly more middling. Nowhere near as high as the peak of the dot com bubble.

Honestly think the spread's big enough you could use it in sales now. As in, two salesmen selling some consumer product, all else being equal, if one just crosschecks leads with the voter data file and calls the Republicans first, he'll probably considerably outsell the one calling at random at this point.

[jk]

Re: Kabuki & Politics; Perception & Reality

where are the independents?
the republican numbers must include all those coal miners who are waiting for the mines to reopen. and the out of work auto workers who think that manufacturing will return to michigan, instead of alabama et al.

[dcarrigg]

Re: Kabuki & Politics; Perception & Reality

I don't actually think it's all bad. More voters know what they're getting by picking a party than ever before. But the topline econ survey data is more affected. Used to track the S&P500 pretty well. Now it's way ahead of the curve. Reality is middling, but not so bad. Democrats feel slightly worse. Republicans feel way better. I suspect this also means Republicans will outperform voting expectations in 2018. If you think this is the best economy in the history of America, you have a strong incentive to see it continue.

[llanlad2]

Re: Kabuki & Politics; Perception & Reality

What's crazy about that "perception" is they are both basically getting the same outcome regardless of what party is in power. And democrat voters and politicians are cheerleaders of the state sponsored defense complex. Bonkers.

The DoD recently brought out an unclassified report (click on the title). It's basically advocating a re-tooling of the US's industrial / manufacturing base and a more isolationist view. And mentions China a lot. I've copied some passages below.

Assessing and Strengtheningthe Manufacturing and DefenseIndustrial Base and Supply ChainResiliency of the United States

On manufacturing:
Decoupling of Design and Manufacturing
As U.S. companies lost their domestic supplier ecosystems, design decoupled from manufacturing and many firms shifted focus from designing and building products to designing and selling products. With increased offshoring of manufacturing, many companies have excised their process engineering capabilities, further reducing technical innovation and deterring future investment in next generation manufacturing.37 Together, these effects jeopardize the ability of America’s manufacturing base to supply innovative products and skilled workers to the industrial base, threatening capabilities needed for national security.

On the trade deficit and open markets
U.S. defense products enjoy a very successful export market with $41.93B in FY2017 sales,59further bolstered by the Administration’s efforts to help facilitate this critical part of our economy. However, the erosion of parts of our industrial base, is, in part, attributable to theindustrial policies of major trading partners that have created an unfair and non-reciprocal trade environment. Those policies contribute to the U.S. annual trade deficit in goods, the largest in the world at more than $796 billion.60 Of this total, almost half of the U.S. tradedeficit in goods is with China – roughly $375 billion in 2017.61 The European Union accounts for another roughly $150 billion.
Many nation states have implemented coherent investment plans and tax policies, such as Germany’s Industry 4.0 initiative, forcing U.S. firms to compete against nation states with wellresourced policies to support their domestic industries. In this environment, the lack of acoherent U.S. industrial policy puts domestic suppliers at a disadvantage, amplified by the trade policies of some U.S. competitors that violate trade norms of reciprocity and open competition.

Even textiles

While the United States is the fourth largest exporter of textile-related products in the world,there remain acute challenges across the more than 8,000 products the domestic textileindustry supplies to DoD.68 The single qualified domestic source for high-tenacity polyester fiber used in many DoD tent systems dissolved its business due to its inability to compete in anincreasingly competitive global fibers and textiles market.69 Currently, there is no U.S.manufacturing capability for high-tenacity polyester fiber that allows for military specificationqualification.

And last but not least China-There are pages and pages on China summarised as follows
China’s economic growth has, in turn, helped finance its rapid military modernization. In 2001,China’s annual military budget was less than $20 billion.73 By 2017, it exceeded $150 billion,74second only to the U.S. China’s non-market distortions to the economic playing field must end or the U.S. will risklosing the technology overmatch and industrial capabilities that have enabled and empoweredour military dominance – even as China seeks to raise its military capabilities to U.S. levels.

Huxley was right the military-industrial complex makes policy.
.“A democracy which makes or even effectively prepares for modern, scientific war must necessarily cease to be democratic. No country can be really well prepared for modern war unless it is governed by a tyrant, at the head of a highly trained and perfectly obedient bureaucracy.” Aldous Huxley

And so the trade war with China is just getting started.