The politics of the economy are 95 perception, five percent reality. (Maybe it’s 90/10 but we aren’t willing to go any lower than that.)
Most people are detached from the nitty-gritty details of economic strength or weakness — U6 for the win! — and tend to judge the health of the economy on how they it affects their own lives.
If people think things are getting better — whether or not they actually are — they are more likely to go out to dinner, buy a car or even build a house. That spending, in term, helps the economy actually improve. Perception creates reality.
And that’s why this economic confidence chart from Gallup is such good news for President Obama and his reelection campaign.
While a -17 measure is nothing to pop bottles about, it does represent the best weekly level of Gallup’s economic confidence in four years. (Gallup calculates economic confidence by a combining peoples’ current ratings on the economy with their perception of whether things are getting better or worse.)
The economic confidence number “suggests that the moderately improving economy and, in particular, the the improving job situation are offsetting, at least in part, the drag of gas prices on consumer perceptions of the economy,” wrote Gallup’s chief economist Dennis Jacobe in a memo on the results.
Of course, economic confidence is a tenuous thing. And, a disappointing jobs report in nine days time could well set confidence plunging downward again — and, with it, President Obama’s reelection prospects. And, Republican rightly note that consumer confidence dipped in March — a sign that not all the news on the economic perception front is good for the White House.
But, for the moment, the White House has to be happy about where the trend line is headed. Very happy.