Presidential rhetoric and the economy
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Does the relative optimism of presidential remarks on the economy affect U.S. economic performance? We theorize that the relative optimism of presidential remarks should affect economic performance by altering consumer perceptions of the economic news and consumer sentiment, which in turn affect the risks consumers are willing to take in spending decisions. We measure the relative optimism of presidential remarks on the economy through content analysis of all public statements on the general economy and unemployment from January 1978 through April 2002. Controlling for current and past economic performance, we use vector autoregression analysis to show that presidential remarks significantly affect people's perceptions of the economic news, as well as their confidence about current and future economic conditions. Using simulation analyses, we also demonstrate that presidential rhetoric operating through these indirect channels can have substantial impacts on U.S. economic growth and unemployment. The larger implication is that the president has a heretofore little appreciated role as rhetorical leader of the economy. 2005 Southern Political Science Association.
