Fed Up: The Determinants of Public Opposition to the U.S. Federal Reserve

Abstract

The U.S. Federal Reserve plays a major role in the global economy, despite low public awareness of its functions and responsibilities. Scholars have recently noted three ongoing developments in the politics of the Fed: A dramatic increase in the size of the Fed’s balance sheet, a decrease in the Fed’s insulation from partisan politics, and evidence that the Fed has struggled to manage inflation in recent times. Despite the contributions of recent studies, little is known about how Americans’ levels of diffuse and specific public support for Federal agencies are influenced by trends in agencies’ size and scope, politicization, and performance. In this study, I use a survey experimental design to evaluate the effects of emphasis frames on support for the Federal Reserve. Results demonstrate that while specific support declines in reaction to frames that associate Fed actions with rising inflation, messages about the Fed’s growing balance sheet erode diffuse support for the Fed. However, when reminded of the Fed’s declining political independence, partisans’ levels of support diverge. These results imply the potential for substantial future declines in public support for the operation of this critical, yet largely overlooked, Federal institution, especially among partisans of the presidential out-party.