Fed: Partisan politics grew under Obama; weakens economy

The Federal Reserve Bank of Philadelphia has started publishing an ingenious new "Partisan Conflict Index" that measures the intensity of political fights in Washington by word-searching a Dow-Jones Factiva database of stories in major national and some regional newspapers and comparing them over time.

The index shows roughly that partisan fighting rose and fell while Congress was in session under Reagan and Clinton, generally decreased under George W. Bush, and has jumped as much as 50% under President Obama and the current Congress in which Republicans control the House of Representatives and each side pushes bills the other blocks.

Citing earlier research, the Fed notes that a high degree of political partisanship has been associated with consumer and business uncertainty, which in turn slows the economy. The Index isn't presented as a forecasting tool, but as a data-based indicator of the level of partisan fighting. Readers already inclined to dislike Obama might blame the President for conflict, or they might blame intense opposition by Republicans, for gridlocking Congress and possibly slowing the economy.

The method was developed by economist Marina Azzimonti, who recently left the Philly Fed for a professor's job at the State University of New York at Stony Brook. Azzimonti notes Congress and the President seem to fight most on economic issues, least in times of war. Read her paper here. 

Not all "partisan conflict" is bad, Azzimonti notes. But the long-term increased in partisan conflict has been associated with rising gaps between rich and poor and increased voter polarization between the parties, and it would be useful to see if this also has a measurable effect on successive national budgets, she concludes 

Azzimonti tells us the papers included in the search include "The Washington Post, The New York Times, Los Angeles Times, Chicago Tribune, The Wall Street Journal, Newsday, The Dallas Morning News, the Boston Globe, and Tampa Bay Times" and that she excludes "editorials and commentaries from the search in an attempt to reduce potential ideological biases." The method doesn't appear to control for possible changes in the news business and how they might alter the appearance of conflict over time.

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