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It's the consumer, stupid? What the consumer sentiment index tells us about the 2020 elections

Alexander Coolidge, Cincinnati Enquirer
It's the consumer, stupid? What the consumer sentiment index tells us about the 2020 elections

President Donald Trump is betting that a strong economy will propel him to reelection even as early warning signs of a slowdown have emerged in 2019.

Consumers may hold the key.

Representing two-thirds of U.S. economic activity, consumer optimism or pessimism has the power to forestall or precipitate a slowdown or recession.

"Most incumbents won reelection near cyclical peaks in confidence; when confidence was near cyclical troughs (lows), the winning candidate was usually from the opposite party," said Richard Curtin, director at the University of Michigan's Survey of Consumers, in an Oct. 4 report.

Earlier this month, the college's closely-watched Index of Consumer Sentiment reported a continued rebound to a 96.0 preliminary reading in October after dropping in August to 89.8 amid trade and economic jitters.

Curtin said there's a big difference: a reading in the 90s indicates an economy that is expanding, while a mid-80s reading is only "fair." A reading below 70 reflects a recession. More important than the number is the direction, he said.

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The survey said consumer spending could offset weakness elsewhere in the economy, but that consumers were watching the economy closely.

A look at consumer sentiment in past election years shows:

• The average index reading was in the 90s during six years when incumbent presidents were reelected. Barack Obama won a second term with a lower reading, but the index was rising.

• The last three presidents voted out of office (George H.W. Bush, Jimmy Carter and Gerald Ford) lost in years when the index hovered below its 86.6 average reading.

• Strong readings don't appear to guarantee the party in power another term. Democratic nominee Al Gore lost in 2000 when sentiment was at its highest in an election year. Four other nominees for the incumbent party lost despite solid sentiment.

Here's a look at the University of Michigan's index on consumers and where it stood in past election years:

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This article originally appeared on Cincinnati Enquirer: 2020 election: What consumer sentiment index tells us about vote