The Winter of American Discontent - A Whipsawed American Electorate Reacts www.forbes-tate.com - Forbes Tate Partners
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Economic indicators are strong and largely improving – but the American electorate is extremely unhappy
E C ONOMIC OUTLOOK: AME R I C AN OPTI MI S M 3 By most traditional measures, the American economy is recovering well from low points and in strong shape, even with inflation. COVID Stock Market Majority (56%) of Americans say the worst is behind The stock market has reached record highs as the us1. The omicron variant may be on the rise, but we are economy has roared back from COVID pandemic lows. in a better place than last year with FDA approval of vaccines for adults and children as well as booster shots. Jobs Home Values Consistent job production has led to more people in the Home values are high for homeowners, as housing workforce and extremely low unemployment. prices surge to new records. In October, homes sold faster than in any other October in recent history. Savings GDP Families on average have more savings and less debt. While GDP gains slowed in the third quarter as the delta Average family wealth is at a record high for families at variant peaked, there are signs that the economy could all income levels. have the strongest growth this year since 1984. Inflation 1NBC News Poll, October 2021. Inflation is the one clear negative economic indicator.
E C ONOMIC OUTLOOK: AME R I C AN PE SS I MI S M 4 But when it comes to the direction of the country, pessimism reigns – and has for 12 years. Nation Headed in Right Direction vs. Wrong Track Data from 1995-20211 2008: Global Financial Crisis Oct 2021: Sep 2001: Oct 2013: Jun 2016: Rising inflation Post 9/11 attacks and the country Government shutdown Pulse nightclub shooting and consumer comes together Apr 1995: prices Oklahoma City 76% 71% 70% Aug 2005: 70% 71% bombing Jan 2000: Hurricane Katrina 52% Bush Inauguration 50% 55% 43% 51% 40% 43% 30% 28% 34% Feb 2017: 22% 21% Post-Trump 22% inauguration 15% 11% Jan 2009: Obama’s Inauguration '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 1NBC News and NBC/WSJ Polls, 1995-2021.
E C ONOMIC OUTLOOK: AME R I C AN PE SS I MI S M 5 Over the same period, Americans have held a near non-stop negative outlook about the economy. Describe Nation’s Economy as Excellent/Good vs. Not So Good/Poor Data from 1997-20211 94% Jan 2003: 90% 88% Wartime anxieties related Nov 2021: 86% to the War on Terrorism Rising inflation and 75% consumer prices 74% 2008: 70% 60% Bear Stearns bankruptcy 65% 2007-2008 financial crisis Oct 2013: 55% Government shutdown 1998 – 2000: 2009: Dot Com Bubble Depths of the Great Recession 2011: Slow pace of economic recovery Oct 2006: Declining inflation rate Nov 2018: Low inflation Sep 2001: 9/11 terrorist attacks '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '17 '18 '19 '20 '21 1Washington Post-ABC News Polls, 1997-2021.
E C ONOMIC OUTLOOK: AME R I C AN PE SS I MI S M 6 Despite COVID's retreat, consumers lack confidence. Index of Consumer Sentiment November Scores from 1952-20211 110.0 COVID era 100.0 Consumer Sentiment Score 90.0 80.0 70.0 67.4 66.0 63.7 60.0 2021 1990 2011 Inflation 59.5 Recession Slow pace of 1970s economic recovery 50.0 Stagflation 55.3 2008 Recession 40.0 1957 1979 2001 1952 1953 1954 1955 1956 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Apr-21 Jan-21 Jul-21 Nov-21 1University of Michigan Survey of Consumers, 1952-2021.
Voters have turned away from *every* political leader in our country
POLITIC AL OUTLOOK: AME R I C AN PE SS I MI S M 8 President Biden has seen substantial drops across his approval rating, and also lags behind pre-Trump predecessors. President Biden’s Approval Rating Data from 20211 Biden is doing just slightly Overall Approval Handling the coronavirus Handling the economy better than Trump at this stage in his presidency 69% among recent presidents. Trump: 37% approve Biden: 42% Obama: 51% GW Bush: 86% Clinton: 66% GHW Bush: 56% 53% 53% 52% 51% 49% 47% 42% 40% Apr-21 Aug-21 Oct-21 1NBC News Polls, 2021.
POLITIC AL OUTLOOK: AME R I C AN PE SS I MI S M 9 Americans dislike both parties and the leaders who represent them. Image Ratings Net Favorability (Positive – Negative)* Data from 20211 -29% -22% -15% -12% -9% -8% -8% 1Image ratings from NBC News Polls conducted in August 2021 and October 2021. *Mitch McConnell rating from Morning Consult-Politico Poll conducted September 2021. The net favorability is (Favorable – Unfavorable).
POLITIC AL OUTLOOK: AME R I C AN PE SS I MI S M 10 It's not just politics: lack of confidence extends across many American institutions. Have a Great Deal/Quite A Lot of Confidence vs. Very Little/None Data from July 20211 84% 79% 65% 67% 63% 58% 38% 36% 33% 32% 18% 12% The Presidency The U.S. Supreme Banks Public Schools Big Business Congress Court 1Gallup Poll, July 2021.
What is driving the problem? The "whipsaw" – political, personal, and economic change may be the culprit
DR IV ING THE PR OB LE M: POLI TI C AL C HANGE 12 Constant political change: The last five presidents have started with unified control, and pushed for large, dramatic political change in opposite directions. This dramatic seesawing has never happened in American history. Year Presidency Legislative efforts 1993 Clinton Economic Package, Health Care Tax Cuts, War on Terror, Social 2001 G.W. Bush Security Privatization 2009 Obama Affordable Care Act 2017 Trump Tax Cuts 2021 Biden ARP, BIF, BBB … and Biden's four predecessors all lost their unified Congressional majorities.
DR IV ING THE PR OB LE M: INFLATI ON 13 Inflation is almost at a 40-year high, but even that number may understate consumers' real-life experience. U.S. Inflation Rate Over Time, 1921-20211 20 WWII Recession 15 Stagflation 10 Inflation Rate Percentage 6.8% 5 0 1921 1931 1941 1951 1961 1971 1981 1991 2001 2011 2021 -5 -10 -15 1U.S. Bureau of Labor Statistics.
DR IV ING THE PR OB LE M: INFLATI ON (B a c on , C a r s) 14 The speed of these price increases for basic products has dramatic. The speed and size of the price increase for items over the past few months is larger than we’ve seen in the past 40 years. From bacon to used cars, prices are skyrocketing. COVID era COVID era Average Price of Bacon, 1980-2021 +39.2% Average Price of Used Cars, 1980-2021 +47.7% Source: U.S. Bureau of Labor Statistics. Shaded areas indicate U.S. recessions.
DR IV ING THE PR OB LE M: INFLATI ON (Ga solin e ) 15 The gas price increase has been exceptionally severe. Gasoline prices are at a seven-year high – and increasing at a record pace, with a 58.1% increase over the past year. COVID era 12-Month CPI Percent Change, November 20211 Average Price of Gasoline, 2005-20212 +86% 35.0% Gasoline 30.0% 58.1% 12-month Increase 25.0% 20.0% 15.0% 10.0% 6.8% 5.0% 0.0% All items Food Energy All items less food and energy Source: U.S. Bureau of Labor Statistics, Chart 1 and 2.
DR IV ING THE PR OB LE M: HOME OW NE R S HI P & R E NT 16 While home prices have increased, homeownership rates have fallen at an unprecedented rate and rent prices are spiking. Homeownership Rate and Owners’ Equivalent Rent in the U.S. Over Time, 1992-20211 70.0 5.0 69.0 4.0 Percent Change from Year Ago 68.0 3.0 Percent 67.0 2.0 66.0 1.0 65.0 0.0 64.0 63.0 -1.0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020- 2021 Homeownership Percent Owners' Equivalent Rent Percent Change from Year Ago 1U.S. Census Bureau. Shaded areas indicate U.S. recessions.
DR IV ING THE PR OB LE M: PE R S ONAL SAV I NGS 17 While savings rates were high – they have sunk dramatically, which can also lead to insecurity. This sets the stage for more pain for the consumer as people go back to spending more and saving less. Personal Savings Rate Over Time, 2000-20211 30.0 25.0 PSAVERT Percentage 20.0 15.0 10.0 5.0 0.0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2021 Personal saving as a percentage of disposable personal income (DPI), frequently referred to as "the personal saving rate," is calculated as the ratio of personal saving to DPI. 1U.S. Bureau of Economic Analysis. Shaded areas indicate U.S. recessions.
DR IV ING THE PR OB LE M: S UPPLY C HAI N 18 Americans are experiencing supply chain issues as we head into the holidays. Delays combined with labor shortages mean that retailers from all industries cannot keep up with demand and spending habits of the “post-pandemic savings” consumers. Supply Chain Disruptions by Sector In the last week, did this business have domestic supplier delays? (percent saying yes) Manufacturing Amazon, Apple warn supply- Retail Trade chain woes, labor shortage Accomodation and Food Services could hamper holiday season Construction Tech giants’ woes suggest headwinds Other Services (Except Public Administration) for smaller companies without their Oct. 28, 2021 Wholesale Trade financial might. Utilities Health Care and Social Assistance Administrative and Support and Waste Management and… National Average (45%) Arts, Entertainment, and Recreation Mining, Quarrying, and Oil and Gas Extraction Americans are mad about the Transportation and Warehousing economy, but still ready to shop Educational Services Inflation and supply chain woes aren’t Information stopping shopping, but they’re Real Estate and Rental and Leasing Nov. 22, 2021 changing it. Professional, Scientific, and Technical Services Finance and Insurance 0 10 20 30 40 50 60 70 80 Source: U.S. Census Small Business Pulse Survey, October 2021.
HE ALTH OUTLOOK: C OV ID & ME NTAL HE ALTH 19 Taken together, Americans are suffering from mental health issues at triple the pre-COVID rate. Percentage of Adults Reporting Symptoms of Anxiety and/or Depression Disorder by Age Percentage of Adults April 2020-October 20212 Reporting Symptoms of Date 18-29 years 51% Anxiety and/or Depression Disorder1 30-39 years 42% Full Year 2019* 10.8% 40-49 years 38% April 2020 35.9% 50-59 years 34% July 2020 40.1% 60-69 years 28% January 2021 41.1% 70-79 years 21% October 2021 31.6% 80+ years 19% 1National Center for Health Statistics. 2CDC Household Pulse Survey.
What to watch for in 2022
T HE D E M OC R AT IC NE E D 21 Democrats need to see dramatic changes – not just in indicators, but in voters' sense of stability. COVID Americans getting back to normal, and feeling confident about future protection. Jobs A strong job market – with workers STAYING in positions and feeling confident about their work status. Inflation A dramatic return to low inflation – particularly across day-to-day items. … but could any of this defy the sour, distrustful mood that hasn’t spared either party over the last 20 years?
2022 OUT LOOK : A D AVA NTA GE GOP 22 Presidents almost always lose seats in midterm elections. Over the past 7 midterms, the president’s party lost an average of 26 seats in the House and 4 in the Senate. President’s Party President’s Party Year Presidency President’s Party Gain/Loss of House Gain/Loss of Senate Seats Seats 1970 Nixon R -12 +1 1974 Ford R -48 -4 1978 Carter D -15 -3 1982 Reagan R -26 +1 1986 Reagan R -5 -8 1990 H.W. Bush R -8 -1 1994 Clinton D -54 -8 1998 Clinton D +5 0 2002 G.W. Bush R +8 +1 2006 G.W. Bush R -30 -6 2010 Obama D -63 -6 2014 Obama D -13 -9 2018 Trump R -40 +2 Source: Brookings Institution.
2022 OUT LOOK : A D AVA NTA GE GOP 23 The generic ballot shows the hill that Democrats need to climb… Democrats traditionally need a 4 (or more) point advantage on the generic ballot to break even. History is on the GOP's side: only one first-term incumbent has gained House seats in the last half century – and most have lost substantial numbers. Source: FiveThiryEight.
2022 OUT LOOK : A D AVA NTA GE GOP 24 Unless things change, the GOP has a simple message – the American dream isn't working. Baseball: MLB on lockout. Hot dogs, apple pie: Prices for ingredients are way up. Chevrolet: Six week to six month waits for new cars.
CON TACT 25 CONTACTS ADDRESS Doug Usher 777 6th Street NW DUsher@forbes-tate.com 8th Floor Washington, DC 20001 Trevor Hanger THanger@forbes-tate.com Tori Miller TMiller@forbes-tate.com
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