Is The Election A Drag On The Economy?

The economy has continued to add jobs month after month for three years now. Well over 5 million jobs have been created during that time, but job gains and economic growth in 2012 have lagged behind 2011. Is it possible the election is causing a drag on the economy?

To be clear, I have no proof that the election is impacting economic growth, but I do think its an interesting, but untested, theory. The U.S. economy is largely driven by consumer sentiment. If people believe the economy is doing well they are more likely to spend money. Because of this, I wonder what impact a year of election politics does to consumer psychology. Through the Republican primary and now the general election process you have Republicans saying how bad things are, that Obama’s economic policies have failed and that we are worse off than we were four years ago. Of course all of this is nonsense. On the macro level the economy is much better than it was four years ago, but it is true that on the micro level, you might be doing well, but your neighbor might not. If high-profile candidates are on TV every day telling us how bad things are, it’s seems far from a stretch to say it might have an effect on consumer spending.

It will be interesting to see what happens over the next 6-12 months regardless of who wins the election. It would not surprise me at all to see job growth and GDP tick up a notch or two.

EconomyElection 2012Politics

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