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Despite what Mr. Trump, seen here on November, 2018, likes to point to as an “economic miracle” in the country, voters remain divided on the state of the economy.Kevin Lamarque/Reuters

If there is anything U.S. voters should be able to agree about these days, it’s that the economy is doing pretty well.

Unemployment fell below 4 per cent in 2018, the lowest in 49 years. Gross domestic product, a broad measure of economic activity, grew by 2.9 per cent. Last year was among the best for the U.S. economy in the past decade as consumers and businesses boosted their spending.

Yet, two years into his presidency, U.S. President Donald Trump remains as deeply unpopular as before. His approval rating has averaged just 40 per cent during his presidency. Only 44 per cent of voters said they approved of the President in February, roughly the same as when he took office in January, 2017, as the least popular incoming president in 72 years.

Despite what Mr. Trump likes to point to as an “economic miracle” in the country, voters remain divided on the state of the economy. More than 80 per cent of Republicans told Gallup last month that the economy was getting better. Just 31 per cent of Democrats agreed.

Mr. Trump’s struggles to translate a strong economy into rising popularity upend conventional wisdom about how voters are supposed to behave.

For much of modern history, presidents could count on being rewarded for presiding over an economic recovery, and punished during a downturn. “For a long time, research has found a strong link between the economy and presidential approval,” Pepperdine University political scientist Brian Newman says. “That link may be broken entirely, or it may be more nuanced and harder to see now.”

The Trump presidency is helping to confirm new ideas about how voters actually make up their minds on the health of the economy, with significant implications for things like consumer spending.

A deeply partisan lens

Voters have become increasingly polarized in how they see presidents, a trend political scientists say started in the late 1990s and has reached record levels under Mr. Trump.

Nearly 90 per cent of Republicans said they approved of the President last year, compared with just 8 per cent of Democrats. It is the biggest partisan gap recorded and points to why Mr. Trump’s approval rating has barely budged since he took office.

“If the President’s partisans are willing to defend him or excuse anything, then his approval rating can only drop so far," said John Sides, a political scientist at George Washington University. "If the opposite party’s voters won’t give him credit for anything, then his approval rating can only rise so far.”

That growing political polarization helps explain why voters now tend to interpret what should be objective measures of the economy – such as job growth or stock-market gains – through a deeply partisan lens.

Republican optimism about the economy soared in the months after Mr. Trump took office, despite little actual change. Meanwhile, Democrats today are as pessimistic about the economy as Republicans were in 2009, when Barack Obama took office amid a deep recession.

Mr. Trump has faced another conundrum: The better the economy performs, the less voters tend to focus on it. During the early years of the Obama administration, nearly 80 per cent of Americans told pollsters the economy was the most important issue. Today, that number is closer to 12 per cent.

Mr. Trump himself has helped shift attention away from the economy by focusing on issues Dr. Newman says are most likely to polarize voters, such as immigration and a border wall.

Researchers are also starting to dispel the popular narrative of 2016 election campaign: that the economic anxieties of the white working class fuelled racial fears about immigration and global trade. Instead, they argue that long-standing racial tensions influence voters’ ideas about the economy.

Dr. Sides says the strongest indicator that people voted for Mr. Trump was not personal finances, but whether they told public opinion polls as far back as 2011 that they believed non-white workers were getting ahead at the expense of white workers.

“The important factor was not whether you thought you might lose your job, but whether you thought whites were losing jobs to minorities,” he says. Those racialized ideas on economic fairness helped underpin support for Mr. Trump’s signature campaign pledges to rip up free-trade agreements and build a wall with Mexico.

The spending gap

At the same time, new research indicates a president’s popularity actually affects how consumers spend money.

Studying decades of data, academics Ellen Key and Kathleen Donovan found that a slight decline in a president’s approval caused a significant drop in consumer spending that lasted for several months. Over time, steady changes in a president’s approval rating can add up to billions of dollars in added or lost economic growth.

Increasing political polarization also makes it more likely a sizeable share of voters will always disapprove of a president – and curb their spending because of it.

“Not only does [presidential] approval affect how we think the economy is doing, but it also affects how we spend our money,” says Dr. Key, a political scientist at Appalachian State University. “With consumer spending being such a big component of GDP, this means how we feel about the president could actually end up affecting objective economic conditions.”

Economists have seen signs of this under Mr. Trump. Consumer confidence increased sharply after the 2016 election, but actual consumer spending has not responded as quickly. Some political scientists chalk this disconnect up to fears among Democrats and many independent voters about what Mr. Trump could do to the economy.

Confidence historically was a good guide to actual consumer spending, says Andrew Hunter, senior U.S. economist with Capital Economics. “But since the election, confidence shot up, but consumption growth didn’t. There’s potentially been this big gap over the past two or three years that hasn’t really showed any signs of closing.”

While data are scant on how national politics affects the ways Republicans and Democrats spend their money, there is some evidence partisan voters respond to different economic signals. Democrats are more sensitive to the unemployment rate, Republicans to inflation, Dr. Key says. Microsoft Research found that Republican neighbourhoods in New York registered more new vehicles after Mr. Trump’s election than Democratic neighbourhoods.

During Mr. Trump’s presidency, Republicans have tended to point to soaring stock-market returns and business investment as signs of the country’s economic resurgence. Democrats point to stagnant wages amid a rising cost of living, soaring health-care costs and student debt as proof the economy is not working for everyone.

Adding to Mr. Trump’s challenge in selling his message of an economic renaissance, the U.S. economy is widely expected to slow this year, thanks partly to U.S. Federal Reserve interest-rate hikes that have helped curb home sales, and the end to the temporary spending boost from Republican tax cuts.

While that will keep the U.S. economy from overheating, it could be bad for Mr. Trump heading into a 2020 presidential election. “Lesser growth creates its own political risks, only because the President and his economists said that we could grow by 3 per cent for the next decade or more,” says Joel Naroff, president of Naroff Economic Advisors.

That will likely make it harder for the President to convince voters of his economic miracle – and give Republicans and Democrats even more reason to disagree about the state of the U.S. economy.

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