Political Business Cycles in the Public Mind

Abstract

Numerous studies have sought to discover political business cycles in macroeconomic variables. Although voters' subjective economic expectations have been shown to influence their electoral decisions, no existing research has attempted to uncover cyclical patterns in citizens' economic expectations. Using survey data, I seek to determine whether expectations shift to benefit the incumbent president's electoral interest. The analyses show that the percentage of the public predicting an economic upturn increases before a presidential election. One explanation for the findings is that voters might extrapolate cyclical expectations from macroeconomic conditions that contain election-driven cycles. Yet the analyses show that expectational cycles still appear when the macroeconomic conditions are held constant. I conclude by drawing an explanation without recourse to macroeconomic cycles.