Over at Econbrowser, Professor Hamilton discusses a recent paper by Blinder and Watson that looks at the difference between GDP growth rates under Democratic and Republican administrations. Growth is higher under Democratic administrations, but the researchers find that this is due to luck, not policy. Republicans tended to be in office during GDP-killing oil shocks, while Democrats benefited from things like the productivity-enhancing growth of Walmart.
But the third factor after oil shocks and productivity gains cited by the authors is "more optimistic consumer expectations
(as measured by the Michigan ICE)." Could this be influenced by more optimistic media coverage of the economy during Democratic administrations? Remember the relentless drumbeat of negativity in the media during the second half of the Bush I presidency? Surely that constant refrain begins to affect consumer sentiment. A 2004 Federal Reserve study found that indeed, news coverage does significantly affect consumer sentiment. Meanwhile, the entire Obama presidency has been a worse economy than Bush I in terms of unemployment, underemployment, welfare dependency, and the wealth gap, but the media coverage has been muted on the economy and fawning on Obama personally.
Media bias toward liberal views is well-documented, and the vast majority of national news reporters and producers reflect their New York - Washington DC surroundings and vote consistently Democratic. It would be naive to believe these views don't affect their coverage of the economy, or that the tone of media news coverage doesn't affect consumer confidence.
UPDATE: Edited to remove the guy's name. I hope nobody harasses him or his employer. He was good-natured and his sign was innocuous a...
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