While the CBO poured cold water on the RyanCare plan – and implicitly delayed the bill and thus tax reform – Bloomberg's Michael McDonough discovered that deep inside the University of Michigan Consumer Sentiment Survey, there is reason for President Trump to be optimistic on passing his fiscal agenda.
In February, 28% of respondents voluntarily mentioned news they heard about the government's economic policy in a favorable light, a record high. The previous, pre-2016 election peak for positive mentions was just 9%. This is especially notable as the survey doesn't specifically ask participants to respond about government or political news.
By comparison, McDonough writes that 26% of respondents made an unfavorable reference to government policy-related news, well below the 37% record high set during the 2013 government shutdown. The net effect is that favorable responses beat unfavorable ones by 2 percentage points, a new post-election trend.
Digging a little further, Bloomberg's Director of Economic Reasearch noted the difference between positive and negative responses in February was highest among respondents with some college (12.0 percentage points) or a high school degree or less (16.0 percentage points). The rate of negative responses for those with college degrees or more outpaced positive ones by 9 percentage points. Positive responses from this cohort rose immediately following the election, but the group’s euphoria has already begun to recede.
Sentiment toward government policy, as tracked by this index, has surged since November’s election. However, as McDonough concludes, while this trend may be positive news for the Trump’s administration, it’s important to note that the historic lows of this index all coincided with the U.S. debt-ceiling crisis, credit-rating downgrade and government shutdown.
The debt ceiling is set to be reinstated on March 16, as the administration attempts to lobby Congress to push through an aggressive fiscal agenda.
Another rancorous debate could quickly erode the positive perception of government economic policy news. It could also harm the administration’s chances to get its plan passed, which could cause increased volatility in markets that continue to price in tax reform, spending increases and deregulation.
via http://ift.tt/2mnNLxr Tyler Durden