President Joe Biden faces a tough challenge in the upcoming election: while the U.S. economy is recovering and getting stronger, people still feel apprehensive about him. Pollsters and economists say there has never been such a wide gap between the fundamental health of the economy and the general perception among the public. This gap could be a crucial factor in whether the Democrat secures a second term next year. Republicans are leveraging the discontent to attack Biden, while the White House finds it increasingly difficult to highlight economic progress.
“Bidenomics” will be tested in 2024
Pollsters and economists say there has never been such a wide gap between the fundamental health of the economy and the general perception among the public. The reduction in inflation in 2023 has increased hopes for a softer U.S. Federal Reserve and a strong stock market in 2024. However, small businesses are both excited and anxious about the holiday season, inspired by their customers. Many Americans in an AP-NORC poll indicated that their household expenses exceed their earnings and they are concerned about their financial future.
The U.S. economy is strong, but people are frustrated
According to many indicators, the U.S. economy is strong. A jobs report released on Friday showed that employers added 199,000 jobs in November and the unemployment rate fell to 3.7%. Inflation dropped for more than a year from the concerning 9.1% to 3.2% without causing a recession – a phenomenon that some previous skeptical economists described as “sterilized.”
However, people are still frustrated about the economy, according to the University of Michigan Consumer Sentiment Index. The preliminary figures for December released on Friday showed an increase in confidence as it seems people recognize that inflation is declining. However, the index is still slightly below its level in July.
Potential challenges for Biden and their impact on the election
In a potential warning sign for Biden, those surveyed for the index pointed to the upcoming general elections in 2024. Sentiment rose significantly among Republicans more than Democrats, indicating that Republican voters have become more optimistic about winning the White House again.
Jared Bernstein, chair of the White House Council of Economic Advisers, stated that a strong underlying economy is an “absolute necessity” for ultimately boosting consumer sentiment. He says that as the economy continues to improve, more people will realize the benefits and sentiment will improve.
White House shifts its messages to build confidence in Biden’s economic leadership
The White House has made three major shifts in its messaging in an effort to build confidence in Biden’s economic leadership. The president began using the term “Bidenomics” in his speeches last summer to describe his policies, but Republicans have seized on the term as a point of attack.
White House officials pointed to specific items that have seen significant price reductions. They noted the drop in turkey prices during Thanksgiving as well as egg prices. Biden repeatedly emphasizes that he has lowered insulin costs for Medicare participants, while other officials discuss how gas prices have fallen from their peaks.
Secondly, Biden has recently started blaming inflation on companies that raised their prices when they saw an opportunity to improve their profits, drawing more attention to an argument used for the first time when gas prices spiked. The president’s argument is viewed skeptically by many economists, but the intended message to voters is that Biden is fighting for them against those he blames for causing inflation.
Now Biden is tracking the record of former President Donald Trump, the current Republican candidate. Biden’s campaign sent out a statement after Friday’s jobs report saying: “Despite his claims of being the jobs president, Donald Trump had the worst jobs record since the Great Depression, losing nearly three million jobs.”
Response
Republicans and Their Impact on Voters
The Republicans’ response to Biden has been to ignore positive economic data and focus on how voters feel. With the annual inflation rate falling, Republican messaging instead concentrated on rising consumer prices over several years without taking wage gains into account. Republican politicians have argued that people should trust their feelings about the economy rather than the statistics Biden points to.
Senator John Barrasso, a Republican from Wyoming, said in a recent speech: “Joe Biden’s message to them is simply this: he says don’t believe your lying eyes.” Glenn Youngkin, the Republican governor of Virginia, placed the entire blame for inflation and people’s feelings of despair on Biden.
Potential Causes of This Gap and Its Impact on Public Opinion
There is no single reason for this gap between key data and the public’s overall sentiment. However, experts trying to understand the situation have multiple theories about what’s happening. In addition to the impact of the pandemic, social media may have overwhelmed how people feel about the economy as they view the extravagant lifestyles of influencers. Many people evaluate the economy based on their own political beliefs rather than the fundamental numbers.
It is also possible that it simply takes time for people to adjust after a period of high inflation. Thus, there is a lag before a decline in the inflation rate leads to an improvement in consumer sentiment, according to recent analysis by economists Ryan Cummings and Neil Mahoney.
Another possibility is that the loss of pandemic-related government aid has made people more financially vulnerable. Millions of families received checks from the government and benefited from the expanded child tax credit, which was deposited directly into their accounts. Republicans have blamed this funding for fueling inflation, but that money also initially helped protect people from the pain of rising prices.
After adjusting for government transfers and taxes, the average annual income for a person in the bottom half of earnings was $34,800 when Biden took office, according to an analysis by Gabriel Zucman, an economist at UC Berkeley.
Samuel Rines, an investment strategist at Corbu, found that companies including Pepsi, Kraft Heinz, Procter & Gamble, and Kimberly-Clark have exploited rising food and energy prices following Russia’s invasion of Ukraine in 2022 to raise their product prices and increase profits.
Profit reports indicate that consumers began to tire of double-digit price increases from some companies this summer, prompting those companies to indicate that future price hikes will be closer to the historical average of 2%.
Biden could reasonably argue that companies have taken advantage of the war in Ukraine and the pandemic to raise their prices, and Rines stated that these increases occurred 12 to 18 months ago and Biden’s current argument does not apply to what businesses are doing now.
Rines said regarding the president’s message on rising prices: “It’s coming late enough at about 18 months.”
Source: https://apnews.com/article/biden-economy-jobs-inflation-sentiment-53db7f95d14db2557b00424254208272
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