"Trump's Great Economic Divide" (headline from the WSJ)

Today's "Ahead of the Tape" column in the WSJ mocks Trump's pessimistic view of the economy by contrasting his pessimism with the positive level of consumer sentiment. The journalist quips that the "gulf between scary headlines and current sentiment is 'yuge.'" Steven Russolillo, the journalist, provides a graph of the Michigan Index of Consumer Sentiment to illustrate his point that consumers are confident.

He should have shaded in the recession period and he would have noted that this is more of a coincident rather than a leading indicator. Here is the same graph with the recessions shaded.

(Also note that the journalist omitted the last data point, which turns down, so that his graph give the impression confidence is going up.)

In fact, one notices that sentiments tends to peak one year before a recession. . . But wait! The index peaked about a year ago! Does this mean we are now entering a recession? That we will know only in retrospect. In the meantime, we all should beware lest we let our politics cloud our economic analysis. (Remember Capt. Renaud's line about politics in Casablanca? "I have no conviction, if that's what you mean. I blow with the wind, and the prevailing wind happens to be from Vichy." He would have made a good economist, I think.)

My personal view is that our current economic setup is doomed, but that has little to do with either democrats or republicans.