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The Winter of American Discontent - A Whipsawed American Electorate Reacts www.forbes-tate.com - Forbes Tate Partners
The Winter of American Discontent
A Whipsawed American Electorate Reacts

www.forbes-tate.com
The Winter of American Discontent - A Whipsawed American Electorate Reacts www.forbes-tate.com - Forbes Tate Partners
Economic indicators are strong and
largely improving – but the American
electorate is extremely unhappy
The Winter of American Discontent - A Whipsawed American Electorate Reacts www.forbes-tate.com - Forbes Tate Partners
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.
The Winter of American Discontent - A Whipsawed American Electorate Reacts www.forbes-tate.com - Forbes Tate Partners
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.
The Winter of American Discontent - A Whipsawed American Electorate Reacts www.forbes-tate.com - Forbes Tate Partners
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.
The Winter of American Discontent - A Whipsawed American Electorate Reacts www.forbes-tate.com - Forbes Tate Partners
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

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                                        Apr-21
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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

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           TMiller@forbes-tate.com
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