In 2025, the extent to which economic sentiment reacts to media coverage varies significantly depending on political alignment. For individuals identifying as Democrats or leaning Democratic, the connection is strong, while Republicans and Republican-leaning respondents show little to no correlation between news tone and their economic outlook.
Data from the Federal Reserve Bank of San Francisco, combined with consumer sentiment surveys from the University of Michigan, reveal distinct patterns across partisan groups. When news sentiment—measured through lexical analysis of newspaper content—is positive, Democratic respondents tend to report higher confidence in the economy. The sensitivity coefficient stands at 0.88 for this group, with an adjusted R-squared of 0.70, indicating a robust relationship.
Independents also demonstrate a notable response, registering a sensitivity of 0.66, which is statistically significant, and an even higher explanatory power (adj-R2 of 0.82). However, for Republicans and those leaning Republican, the coefficient is -17, which fails to reach statistical significance, and the model explains only 2% of the variation in sentiment (adj-R2 = 0.02). This suggests that news tone has virtually no measurable impact on their economic perceptions.
An intriguing finding is that among Republicans, expectations about the future move in tandem with positive news, yet assessments of current economic conditions inversely correlate with media sentiment—meaning worse news is linked to more favorable views of the present economy. This counterintuitive pattern does not appear among Democrats or independents.
These findings highlight how political identity shapes the interpretation of economic information, potentially influencing consumer behavior and policy responses.
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How Sensitive Is Economic Sentiment Respond to News?
In 2025, it depends. Particularly if you are a Republican/Lean Republic — then it’s almost zero… n nHere’s the relationship of different groups disaggregated by partisan affiliation, against news sentiment (lexographically defined from newspapers), as measured by the SF Fed. n nFigure 1: U.Mich Sentiment – Democratic/Democratic leaning (blue, left scale), and SF Fed News Sentiment index (tan, right scale). October News Sentiment is through 10/26. Source: U.Michigan, and SF Fed. n nFigure 2: U.Mich Sentiment – Independent (chartreuse, left scale), and SF Fed News Sentiment index (tan, right scale). October News Sentiment is through 10/26. Source: U.Michigan, and SF Fed. n nFigure 3: U.Mich Sentiment – Republican/Republican leaning (red, left scale), and SF Fed News Sentiment index (tan, right scale). October News Sentiment is through 10/26. Source: U.Michigan, and SF Fed. n nThe sensitivity of sentiment to news sentiment is 0.88 for Democratic/Lean Democratic, 0.66 for independents (both coefficients statistically significant at conventional levels, and adj-R2 of 0.70 and 0.82, respectively). For Republican/Lean Republican, the coefficient is -17, and is not statistically significant. The adj-R2 is 0.02. In other words, measured news sentiment is unrelated to Republican/Lean Republican economic sentiment. n nOne interesting aspect of the results is that Republican/Lean Republican expectations are positively associated with news sentiment, while current conditions are negatively associated (the worse the news, the better the assessment of current conditions). This is not true for Democratic/Lean Democratic or Independents. Here’s a scatterplot.