Why the US Economy Could Take a Hit After the Election, Regardless of Who Wins

“We all have different political preferences. But despite wanting different things, voters should be able to broadly agree on the likelihood of different electoral outcomes given that much of the relevant polling information is publicly available,” write the researchers. “This is, in fact, far from being the case.”

Some of this could be explained by voters watching TV channels with different political leanings, the researchers acknowledge. And yet, when they showed survey participants recent polling data from different sources, the respondents didn’t change their views, regardless of the source. “The views of many individuals of either party are so tightly held that they are unaffected by information that calls for a more nuanced view,” write the researchers.

Only when respondents saw predictions that included a clear margin of error did they move away from their more confident, extreme predictions. If news reports were to make the uncertainty involved in poll predictions clearer, there could be more common ground among voters, the researchers argue.

The polarization suggested by the survey results could have economic implications, as people’s political views shape their economic expectations. In the survey, respondents predicted a positive future under an administration led by their preferred winning candidate but were pessimistic about what would transpire under the opponent. People’s predictions about the economy can in turn affect their spending, and though past research by Princeton’s Atif Mian, Booth’s Amir Sufi, and Argus’s Nasim Khoshkhou has found evidence that US presidential electoral results don’t typically drive spending decisions, it’s still possible that a sizable percentage of the US population may tighten their budgets after election day—a situation Coibion, Gorodnichenko, and Weber say is likely to occur.

“These results suggest that the upcoming elections might trigger a decline in aggregate consumption after the Presidential election, as members of the losing party adopt a much more pessimistic outlook while those of the winning party maintain their previous optimism,” they write.

The economy is hardly the only thing imperiled by the gap separating Republicans and Democrats, however. The researchers note that current trends of polarization threaten to undermine electoral outcomes and potentially destabilize the current political system.