By Paul Lenchner
A solid case can be made that the Biden administration has compiled an impressive economic record. For example:
The year-over-year inflation rate was 3.2% in July, down from a peak of 9.1% in June 2022
After declining in the first half of 2022, Gross Domestic Product has risen for four consecutive quarters, growing 2.4% in the second quarter of 2023.
The seasonally adjusted unemployment rate was 3.5% in July. It was 6.3% in January 2021.
Almost 800,000 manufacturing jobs have been added during the Biden years, and that sector now employs the most people since 2008.
Hourly wages grew more than price increases in the second quarter for the first time in two years, boosting purchasing power.
Economic forecasts have grown more optimistic about the possibility of a “soft landing” where inflation cools without triggering a recession.
Still, the news is not all good. The greatest weakness is inflation, which remains above the Federal Reserve’s 2% target rate. Consumer interest rates are rising (by design, of course), and visible signs of inflation are prominent, such as in volatile gas prices. This is particularly important because of the weight people give to inflation in assessing the state of the economy. A July Economist/YouGov poll showed that 57% of respondents said the best economic indicator is the price of goods and services. The second most frequent response was the unemployment rate and jobs at 15%.
Perceptions of the American economy and the administration’s economic performance remain negative, though with some signs of improvement. An April Gallup poll found that 64% of respondents had little or almost no confidence in President Biden’s ability to do or recommend the right thing for the economy, while 35% had a great deal or fair amount of confidence in his economic leadership. The Economist/YouGov poll found that 47% believed the U.S. is in a recession, though this figure declined from 60% in April.
How do you explain the gap between positive and generally improving numbers and negative perceptions? Lingering inflation is undoubtedly part of the answer. Given the severity of the economic dislocations of the administration’s initial months, a time lag between actual and perceived change is likely. There is also a general distrust of political leaders and institutions. This development is not new, but it was exacerbated by the attacks of Donald Trump and his supporters on Washington and the “deep state.” Gallup found consistently low levels of economic confidence not only in Biden but also Democratic and Republican leaders in Congress, Fed Chair Jerome Powell, and Treasury Secretary Janet Yellen. Finally, there is the media. As David Brooks of The New York Times wrote in a column on “Why Biden Isn’t Getting the Credit He Deserves,” “A recent study found that over the past couple of decades, headlines have grown starkly more negative, conveying anger and fear.” Anger about inflation and fear of recession contribute to the low regard for Bidenomics, especially, we can reasonably surmise, among users of conservative media.
Presidents routinely receive (and claim) too much credit when the economy is strong and too much blame (from their opponents) when it is weak. This situation is not to say that the president is powerless to affect the economy. Administration initiatives, including the CHIPS Act promoting domestic manufacturing and the Inflation Reduction Act targeting clean energy technology to address climate change, have contributed to job creation and economic expansion. On the other hand, the Fed deserves most of the credit for curbing inflation, and OPEC’s moves to manipulate the petroleum supply have had the opposite effect.
With this caveat in mind, what can the Biden campaign do to build a positive economic narrative for the 2024 campaign? It can tout the progress made in the economy since the president took office. This touting should include repeated references to policies such as CHIPS, the IRA, and the infrastructure law that have fueled gains. Everyday examples, such as stabilizing or declining prices (eggs are an illustration), should be highlighted. The president will surely make regular, well-publicized visits to manufacturing, research, and public works projects to drive home his successes. The pace of these projects can be accelerated within bureaucratic constraints. Voters should be reminded of other steps being taken or proposed to help the well-being of families. Examples include bringing down prescription drugs and insulin costs, forgiving student loans, promoting unions, and raising the minimum wage.
Finally, to borrow Brooks’ phrase, the president should do everything in his power to “heal a brutalized national psyche.” Positive numbers will help here, as will Biden’s naturally upbeat personality. Brooks’ New York Times colleague Paul Krugman brings up an encouraging case from four decades ago: “Ronald Reagan still had fairly low approval in mid-1983, then went on to win in a landslide in 1984 on the strength of the economy’s recovery.” Recall that Reagan’s campaign theme was “Morning in America.” A growing economy, cooling inflation, and an optimistic message are likely a winning formula for Biden.
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