Economic Optimism #2

As promised, it’s time to take a wider look at economic optimism again.

The graph above shows four regular monthly trackers of economic optimism. GfK NOP and Ipsos MORI both ask people each month if they think the economy will get better or worse over the next 12 months – these are the net figures of those thinking better minus those thinking worse. TNS ask a similar question for the Nationwide, but asking about the next 6 months. YouGov in the Telegraph polls ask about how people think their own household will fare over the next 12 months.

Since we last looked at the graph in April, you can see the nacent turnaround in economic optimism then has grown into a full scale recovery now. MORI is so far the only company to show net economic optimism in positive territory, but everyone shows the public becoming more and more optimistic about what lays in store for the economy. Note that this doesn’t mean people are optimistic about the economy now – other questions show people still think it’s in a pretty dire state – but they do think things will improve in the next twelve months.

What does this mean politically? It’s harder to say than people think. The naive response is to assume the economy getting better means the government recover support – after all, the economy going down the pan damaged their support, didn’t it? In a fair world it would, and I suspect to some extent it does, since optimism is likely to make people feel warmer towards the fear in charge than despair. However, the Major government notably failed to make any political recovery to match the economic recover at the tail end of the last Conservative government, and a good argument can be made that people thinking the recession is ending will make them less risk adverse and more willing to risk a change of government.

Speculation aside, let’s look at the figures. Here, once again, we have the average of the economic confidence figures, and Labour’s average lead in the polls each month.

Still some relationship there at the early stages – Labour went down at about the same time, recovered a bit at about the same time and so on. The relationship seems to break down entirely though from the start of this year: economic confidence has returned, but doesn’t seem to have done Labour any favours at all. It appears economic troubles dragged the government down, but there’s no sign yet of economic recovery picking them up again.

53 Responses to “Economic Optimism #2”

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  1. This thread is about economic optimism and whether increased optimism will translate to an improved performance by the Govt.

    Clearly, the Tories have an interest in playing down any kind of optimism on the basis that it might just lead to such an improvement.

    Telling fibs re the abolition of all figures apart from Brown and Darling’s just shows how rattled the opposition is becoming.

  2. John TT,

    Economic optimism is inextricably linked to economic confidence. If people are confident that the economic position will improve, they will be more optimisitic about the out-turn. If they are more optimistic about the future, they will gain in confidence about the present, which in turn feeds their view of the future.

    The self-reinforcing relationship between optimism and confidence also works the other way round. If people lack confidence, they will become pessimistic. If they are pessimistic, their confidence level falls. etc.etc.

    The relevance in terms of polls and voting intentions is that if Government action / inaction undermines confidence, this will inevitably feed through into economic optimism. Playing fast and loose with what information about future spending plans and their consequences for the public finances is made available and when is not action calculated to inspire confidence.

    Attacking one’s opponents on the basis of an issue sublty different from the original question is also a classic obfuscation technique by those who have something to hide.

    Begs the question as to who is being rattled, and why ?

  3. Paul-I wasn’t precise enough in defining which official figures I meant.
    I meant forecasts.

    ………so……I wonder….to clear the decks completely of anything which might compromise the Labour strategy ( We’ll spend this year & next year -after that we dont’ know-could be OK though)..they need to zap the PBR…which means the Budget has to go… a GE before a Budget ???

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