President Biden’s attempt to sell Americans on his role in post-pandemic economic recovery has fallen flat, even as the U.S. economy defies the odds and expectations of experts.
Despite widespread fears at the beginning of the year that a recession was on the way, the U.S. economy is on track to finish 2023 with low unemployment, steady economic growth and significantly slower inflation.
These remarkable topline numbers, however, have done little to help Biden’s standing with voters or their views on the economy.
“You don’t expect sentiment and economic fundamentals to always track perfectly, but they are really, really off,” said Matt Darling, senior employment policy analyst at the Niskanen Center, a nonprofit think tank.
PUEBLO, COLORADO – NOVEMBER 29: US President Joe Biden speaks about Bidenomics at CS Wind on November 29, 2023 in Pueblo, Colorado. CS Wind, the largest wind turbine tower manufacturer in the world, recently announced they were expanding operations as a direct result of the Inflation Reduction Act. (Photo by Michael Ciaglo/Getty Images)
Biden’s approval rating has fallen to a record low of 34 percent, according to a Monmouth University poll released last week, with nearly 70 percent of respondents disapproving of his handling of inflation. More than half of respondents disapproved of Biden’s record on jobs, even as he presides over a historically strong labor market.
The November unemployment rate of 3.7 percent is just 0.2 percentage points above its pre-pandemic level, which marked a five-decade-low in joblessness. The annual inflation rate also plunged last month to 3.1 percent from a high of 9.1 percent in June 2022, according to the Labor Department’s consumer price index (CPI).
U.S. gross domestic product (GDP) is on track to rise at nearly pre-pandemic levels, far faster than the minimal or even negative growth projected by scores of economists. And the economy posted these strong topline numbers in the face of rapid Federal Reserve rate hikes, which bank officials admitted could tank the economy into a recession.
Biden and his allies have kept the economy front and center in the president’s reelection campaign, which will likely end with a rematch against former President Trump, the front-runner for the GOP nomination. Biden currently trails Trump by 2 percentage points, according to The Hill/Decision Desk HQ poll tracker.
The Biden administration and campaign have tried to reverse the trend by touting the benefits of “Bidenomics” — a loosely defined phrase focused on the president’s enactment of trillions of dollars in stimulus and economic relief, and how those packages have benefited the economy.
“When President Biden took office, he inherited an economy from Donald Trump that was rigged for the ultra-rich and left in shambles. But thanks to President Biden’s leadership, the U.S. economy has consistently defied expectations, with millions of jobs created, inflation at its lowest level in more than two years, and costs coming down for the American people,” campaign spokesman Kevin Munoz said last week after another strong inflation report.
They have also largely waived off criticism of the president’s economic record, accusing Republicans and the media of drumming up discontent for self-serving reasons.
In brief Saturday remarks, Biden expressed confidence in the economy while ripping reporters for how they’ve covered it.
“All good. Take a look. Start reporting it the right way,” Biden said when asked about his economic outlook for 2024, according to a transcript released Sunday by the White House.
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But experts warn that touting strong economic data in the face of growing frustration with the economy risks backfiring on Biden and deepening the backlash.
“People’s individual experiences in the economy should not be considered incorrect just because they’re at odds with macroeconomic statistics,” said Kathryn Ann Edwards, an independent economic policy consultant.
“The economy is doing well, and people don’t feel like they’re doing well. Well, put a name to that: It’s being left behind and it’s being told over and over again, ‘You’re being left behind.’”
Most economic experts pin much of the frustration on the stubbornness of high inflation. While inflation has eased, it is still well above the Fed’s 2 percent annual target. Many Americans have also been feeling the frustration of rising prices for years.
The steep spike in food and energy prices, much of which is driven by the war in Ukraine, also put a serious burden on lower-income households that spend nearly all income on essential goods.
“People can understand over time that houses go up in value, cars go up in value,” said Gordon Gray, vice president for economic policy at the American Action Forum, a right-leaning research nonprofit.
“But at the end of the day, with eggs and gasoline, people kind of want to pay what they have always paid — or at least close to it.”
The pandemic also deepened the decadelong housing affordability crisis in the U.S. as construction screeched to a halt and federal stimulus fueled a homebuying frenzy. After months of record home price and rent growth, Fed rate hikes jacked mortgage rates up above 7 percent for the first time since before the 2007-08 recession.
“Inflation allows a lot of people to name frustrations that come from a lot of sources. And we’ve known for a while that there are there are lots of people who have almost no financial cushion,” Edwards said.
While Biden and his allies acknowledge the toll of high inflation, they are quick to note how much higher prices rose in other countries with even weaker economies. Wages also grew rapidly for most of Biden’s time in office, particularly for workers in lower-paying industries and those his hard by the pandemic.
“There are some industries we’re seeing very big wage increases, both because of how tight the labor market got and how employers needed to compensate workers for jobs that became relatively unattractive and were less flexible,” said Julia Pollak, chief economist at ZipRecruiter.
While millions of workers may have ended up with higher wages relative to before the pandemic, Pollak said the legacy of its disruption may be shaping feelings about the economy.
“We’ve just had this massive whiplash reversal, so everyone has experienced good times and bad times since the start of the pandemic,” Pollak said. “When you have a situation where everyone has experienced bad times, everyone is feeling grumpy and angry at somebody.”
Some Americans lost jobs they loved or businesses they ran, only to find less-fulfilling sources of income down the road. Many struggling families experienced financial security for the first time in their lives as a raft of federal rescue programs kept them afloat, but left them drowning when aid expired. Nearly every industry was reshaped by the pandemic — for better or worse — and amid new complications created by COVID-19.
“This is the best we could ever expect the U.S. labor market to do and there are so many things it is not doing,” Edwards said.
“It is not creating sick days for every American worker. It is not creating paid leave for every American worker. It is not regulating or improving the shifts of people in retail and service sector work. It is not helping people who have a felony conviction get a job.”
Biden could struggle to sell voters on the economy as the scars of COVID-19 linger for millions of Americans, but there are early signs that 2024 could make that pitch easier.
Fed officials expect to make a series of interest rate cuts next year that will ease pressure on the economy and could boost spending. Several surveys of consumer sentiment rebounded in December as the Dow Jones Industrial Average hit new records and gas prices dipped below $3 per gallon in some places shortly before Christmas. And a wave of new rental housing should lower rents across the U.S., giving relief to cash-strapped families seeking affordable homes.
“We have more work to do, but we’re on the right path and making progress executing President Biden’s agenda, a sharp contrast with Congressional Republicans’ plans to cut taxes for the wealthy and big corporations while raising health care and prescription drug costs for hardworking American families,” said Jared Bernstein, chair of the White House Council of Economic Advisers, in a statement.
Some experts remain skeptical Biden can turn the economy into a selling point after years of high inflation, even if the U.S. can bring inflation down without hitting a full recession.
“They’ll have to focus on other things that contrast with the former president, because a legacy of inflation is an unpopular irreducibly, and they’re gonna swim uphill on that and pointing to aggregate statistics can’t wish that away,” Gray said.
But as Biden looks for an edge on Trump, Pollak argued he could use his rival as inspiration.
“Trump was always talking up the economy and for better or worse that changed people’s perceptions of that labor market,” she said. “Politics is the art of claiming credit and avoiding blame. I think Trump on the economy did that better.”
Source: The Hill
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