View ‘Consumer Sentiment’ Surveys Skeptically

Are Surveys About the Economy Really About Political Views?

The headline writers pounced on the plunge in the University of Michigan's (UMich) much-watched index for consumer sentiment on April 11th.

Almost gleefully so.

"Consumer sentiment tumbles in April as inflation fears spike" (CNBC.com) and "Extends Plunge as Price Expectations Soar" (Bloomberg). The Wall Street Journal, "'From Anxious to Petrified': Consumer Sentiment Plunges Further."

Petrified?

Maybe we should lighten up.

Stocks are down, but from lofty all-time highs.

Tariff fears are likely overstated: We have seen this movie before.

The UMich index went down 11% in the first half April, sliding 6.2 points to 50.8 from 57.0 in March.

Then again, what do they know?

Consumers simply may be wrong.

They may be overly worried and rattled by what they hear in the media from political partisans and pessimistic pixel pundits.

They may even be blinded by their own political bent: Democrats want the economy to stumble, Republicans want to see it soar.

This raises a key question about the real truth in the much-watched UMich survey: Are people saying how they really feel about the economy — or are they expressing a political view?

"Partisan views now dominate consumers' economic expectations," states a UMich survey report issued in January 2022.

"Unfortunately, the size of the partisan divide in expectations has completely dominated rational assessments of ongoing economic trends. This situation is likely to encourage poor decisions by consumers and policy makers alike."

The split between Democrat and Republican views of the economy was far larger than any difference based on respondents' age cohort or income level.

This political gap has more than doubled since President Donald Trump took office in 2017.

Under President George W. Bush, Republicans were 21.3 points more optimistic than Democrats, and under President Barack Obama, Democrats were 25 points more optimistic than Republicans.

But this gap suddenly leapt up to 53.1 in Trump's first term and was at 52.3 points during the presidency of Joe Biden, a sign of the polarized political landscape.

On unemployment views, the Democrat-Republican gap was almost 70 points for Trump and Biden, compared with just 17 points for Bush and 31 points for Obama.

In the latest report for April, the sentiment index (on a scale of 100, set in 1966) was at 81.9 for Republicans and at only 34.1 for Democrats; the "index of consumer expectations" was even more widely divergent, at 86.3 for Republicans and a lowly 24.0 for Democrats.

How can fellow Americans see such starkly different views of the U.S. economy? Maybe they are just lying to the UMich survey takers.

"I would not say they are lying, but I will say they are interpreting the world around them in completely different ways," said Joanne Hsu, director of the UMich survey.

"And what really fascinates me is that people make these economic decisions based on these very, very different views.”

These partisan differences show up in consumer spending and business startups.

"Can you believe that Republicans are more likely to start a business under a Republican president, and then that goes down once it switches to a Democratic president, and vice versa? They're making decisions based on those peculiar views," Hsu said.

In the April survey, consumers said their inflation expectations had leapt to 6.7%, up from 4.9% in March, when Democrats predicted 6.5% inflation and Republicans saw only 0.1% — an enormous gap in outlook. Independents were at 4.4%.

The numbers for March also came out on Friday: The consumer price index fell 0.1% from the month before, for the first time since May 2020, to an annual rate of 2.4%.

Everyone was wrong, especially Democrats.

Given this rift, the makeup of the audience responding to the UMich survey is paramount. The April reading is based on a survey of 500 people, with a margin of error of 6%; the final April report will survey an extra 500 respondents for a total 1,000 for the month.

One private equity firm, Thomas J. Lee’s Fundstrat, argues that 57% of respondents are Democrats, which would skew the results in an anti-Trump way.

"I don't know where they get that number from," said UMich's Hsu. "Our largest group is the independents."

In the April survey, 34% of the base was Democrat, 24% Republican, and 42% independent, based on a three-month moving average, she said. Since 2017, the response has been 21%-30% Republican and 25%-36% Democrat, with independents in between.

Hsu issued a new report this month, "Partisan Perceptions and Sentiment Measurement," pointing out that independent voters are a good proxy for the nationwide picture and that the sentiments of Republicans, Democrats, and independents all move up and down together.

She wrote, "The findings confirm the continued validity of our survey measurements in multiple ways."

At the end of the day, you still have to wonder.

Dennis Kneale, a former anchor at CNBC and Fox Business, is host of the "What’s Bugging Me" podcast on Ricochet and author of "The Leadership Genius of Elon Musk." This piece originally appeared on NewsMax.com. ©2025 Dennis Kneale