This is a disastrous economic number for Joe Biden and Democrats
That’s Gallup’s most recent Economic Confidence Index number, which “summarizes Americans‘ ratings of current economic conditions and whether the economy is getting better or worse.” The index ranges from +100 (very good) to –100 (very bad). The rating from May of -45 is the public’s most negative view of the economy Gallup has measured since the end of the Great Recession in early 2009.
This is a disastrous economic number for Joe Biden and Democrats
The numbers inside Gallup’s index provide more daunting news for Democrats. Just 14% of Americans said that economic conditions in the US are “excellent” or “good.” More than three times that number — 46% — said economic conditions were “poor” and 39% rated them as “only fair.” That’s even worse than where Gallup found things in April, when 1 in 5 Americans said that the state of the economy was either “excellent” or “good,” while 42% said they were “poor.”
Gallup’s survey is far from a one-off. In the latest polling from CNN released last month, just 23% of Americans rated economic conditions as even somewhat good. That’s down drastically from the 37% who said the same in December 2021 and precipitously from the 54% who said the same in April 2021.
Gallup’s latest numbers came out on the same day that Treasury Secretary Janet Yellen acknowledged to CNN’s Wolf Blitzer that she had made a mistake when she said in 2021 that inflation only posed a “small risk.”
“I think I was wrong then about the path that inflation would take,” Yellen said. “There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t — at the time — didn’t fully understand, but we recognize that now.”
All of this negative news on how people perceive the economy comes as the Biden White House — and the President himself — seems to have finally grasped just how dire their political situation is on the economy.
On Tuesday, Biden met with Federal Reserve Chairman Jerome Powell and insisted he was laser-focused on inflation. “I’m meeting with the chairman today and Secretary Yellen to discuss my top priority, that is addressing inflation in order to transition from historic recovery to a steady growth for American families,” Biden said. “And my plan is to address inflation, starts with a simple proposition: respect the Fed, respect the Fed’s independence, which I have done and will continue to do.”
And that meeting came a day after Biden published an op-ed in the Wall Street Journal in which he laid out his plan for lowering inflation. “Americans are anxious,” Biden wrote. “I know that feeling. I grew up in a family where it mattered when the price of gas or groceries rose. We felt it around the kitchen table. But the American people should have confidence that our economy face.”
“It’s not the first time President Joe Biden and his aides have sought to renew attention on the economy. But there remains little Biden can do on his own to bring down prices in the immediate term.
“Yet facing near-record low approval ratings five months before the critical congressional contests, the President has determined another concentrated focus on Americans‘ bottom line is necessary to demonstrate his attention on the issue.”
The Gallup numbers make clear the depth of the challenge before Biden. And time is decidedly limited, with just 160 days before Election Day 2022. Unless Biden can turn around perceptions on the condition of the economy — and fast — it is going to be a brutal November for his party.
The good, the bad and the ugly of Biden’s inflation plan
Inflation, at this point, is a problem without a presidential fix. But it is also the issue at the forefront of voters’ minds, so no president can get away with shrugging it off by declaring it “not my problem!”
This is the fundamental problem facing President Biden. Most voters do not care that inflation is an international problem, not just one afflicting the United States. Likewise, they will not grasp that the alternative to an aggressive fiscal stimulus plan during the pandemic was a sustained recession and high unemployment.
Let’s start with the good. Biden is now regularly reminding voters that he is focused on inflation. He wrote a cogent op-ed in the Wall Street Journal to remind voters that he understands their financial pain and assured them that he is doing whatever he can to solve it. He also met with Federal Reserve Chair Jerome Powell on Tuesday, followed by a news briefing with Brian Deese, director of the National Economic Council. By putting Powell front and center and telling voters that “the Federal Reserve has a primary responsibility to control inflation,” Biden is reminding informed voters that it is the Fed’s job to reach a 2 percent inflation rate.
lso in the positive column are Biden’s efforts to stress cost-containment strategies for consumers, such as his administration’s historic release of oil from the Strategic Petroleum Reserve and attempts to cajole ports and retailers into fixing supply chains. Should the China competitiveness bill finally make its way through Congress, Biden will be able to stress the advantage of domestic chip production as well.
But all is not rosy. In the “bad” category is the administration’s repeated reference to deficit-cutting as an inflation-fighting tool. As The New York Times reported, “Deficits, which are financed by government borrowing, are not inherently inflationary: Whether they push up prices hinges on the economic environment as well as the nature of the spending or cutback in revenue that created the budget shortfall.”
And while deficit reduction might make long-term policy sense (requiring significant tax increases and entitlement reform), it’s far from clear this is a political winner. If the point is to stress to voters that the government won’t repeat its gigantic fiscal stimulus (thereby not boosting aggregate demand), Biden should say so. (He might also be raising deficit reduction as a sop to West Virginia’s Joe Manchin, the Democratic senator who still has not come around on a vastly reduced Build Back Better plan.)
The “ugly” has not yet occurred, but it is likely coming. Biden’s proposal to forgive student debt, possibly for people with incomes as high as $150,000 ($300,000 for a couple), would be utterly off-message. It would undercut the notion that Biden is exercising fiscal restraint and would represent a reverse Robin Hood scheme wherein poorer taxpayers, the majority of whom lack a college education, subsidize richer, college-educated Americans.
Respected economists across the political spectrum have reiterated that this would be bad policy and unpopular. Jason Furman, former chair of the Council of Economic Advisers under President Barack Obama, told Newsweek: “The perpetual deferral of interest on student loans is just about the worst policy. It is costly, unjustified, and has added to inflation. Some targeted forgiveness of student loans while resuming interest payments for everyone else would be a less bad policy that would at least help ensure that the biggest beneficiaries of college and graduate school are paying the cost of the likely very beneficial investment they made in higher education.”
Inflation is a no-win problem for Biden. He’s not going to convince many voters that the economy would be much worse if he had not championed the American Rescue Plan, nor will he convince many voters that inflation is largely the fault of the Fed’s miscalculation. The best he can probably do is keep up his “I care” message, highlight the good jobs numbers, root for the China competitiveness bill, avoid an egregious misstep on student loan forgiveness — and pray Manchin finally agrees to something that would help bring down energy and prescription drug costs.