As rising interest rates join the highest inflation in decades as a pinch on the public’s wallets, President Joe Biden and his team are rolling out a novel response: telling voters less than two months before the midterm elections that everything is pretty good.
“Inflation rate month to month was just an inch, hardly at all,” Biden said when asked about the 8.3% annual inflation rate and what he could “do better and faster” to bring grocery bills down.
“This is one of the strongest job markets that we have seen on record,” White House press secretary Karine Jean-Pierre told reporters on Friday when asked about falling stock markets.
“So, given the encouraging initial signs that we have seen on inflation and the continued strength of growth in the job market, so we believe in, the transition remains possible,” she said when asked about Federal Reserve projections that the economy will grow “just 0.2% for the entirety of this year and then 1.2% for next year.”
First, inflation was supposed to be transitory. Now the whole economy is in transition.
Given the low unemployment rates seen under Biden since the COVID-19 business closures wound down and under former President Donald Trump before they started in the first place, there is probably some truth to the argument that the natural state of the economy in general and the jobs market in particular is strong when there is neither a virus nor bad government policies mucking it up.
But we do keep ending up with those two factors interrupting economic growth, which is why the RealClearPolitics polling average shows just 38.7% approving of Biden’s stewardship in this area, compared to 57.9% who disapprove. Biden’s economic approval rating is worse than his approval overall.
Inflation is the economic problem that most vexes Biden and his party in the run-up to November. Its persistence, despite repeated White House assurances the spike in consumer prices would soon run its course, has forced the Federal Reserve into particularly aggressive interest rate hikes. These moves will surely slow the economy, which has already experienced two quarters of negative growth, and may lead to a recession.
The White House is publicly as confident that a recession will not happen as they were that inflation would be transitory. Whether that instills much confidence in anyone else remains to be seen. The markets, majorities in most economic polling, and even larger majorities when polled about the direction of the country do not seem persuaded.
Inflation is much higher than when Biden took office, the stock market somewhat lower, and real wages have barely budged at all. That’s why polls showed the public souring on the economy long before a recession seemed likely.
Biden and his deputies have understandably concentrated on the low unemployment as gasoline and food prices soared. But a recession would touch jobs — unemployment ballooned to 10.8% when inflation was last brought to heel in 1982 — and risk reintroducing voters to terms such as stagflation and the misery index.
While some of the worst of that post-inflation hangover occurred under President Ronald Reagan, who partnered with Federal Reserve Chairman Paul Volcker in stabilizing monetary growth and eradicating stagflation, the next time Biden goes down to Georgia (perhaps to campaign for Democratic gubernatorial nominee Stacey Abrams), he should stop in to ask former President Jimmy Carter for a refresher course on what those economic phenomena did to the Democrats’ electoral prospects.
All presidents talk up positive economic numbers and downplay negative ones. Trump certainly did. But when a president tries to paint a picture of the economy that ordinary voters and consumers do not recognize, it can quickly become untenable.
Ask former Vice President Dan Quayle how invoking the National Bureau of Economic Research’s conclusion that the 1990-91 recession had ended by the time of the 1992 election worked out for the Republican ticket.
Then again, why ask Carter and Quayle? Biden lived through all this history.
Yet he seems doomed to repeat it. While the general public experiences some of the highest prices they have endured in 40 years, Biden is talking about inches and “zero” inflation. An unfamiliar grocery store scanner, or an odd fixation with crudites, is not the only way to appear out of touch.
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Biden could luck out, as he once thought he might do on inflation as gas prices began to drop steadily. A recession isn’t inevitable. Trust the transition.
Unfortunately, when the White House is talking about soft landings while the Federal Reserve chairman is using the word “pain,” that’s not always the way to bet.
