It’s the economy, stupid – this is by far the most well-known election campaign slogan in America: if the economy is doing well in the last two years of the presidential election, the reigning president will be re-elected. Now – less than seven months before the presidential election – the unexpected relativization of this eternal political truth is keeping Joe Biden and his campaign staff in awe.
Bidenomics: only macro successes?
Biden’s re-election hopes can be summed up in one word: Bidenomics, economic policy marked with the president’s name. THE Bidenomics has become the central slogan of the democratic election campaign, the election team advertises the president’s economic successes in every way. It is not by chance, since the economic recession announced by many did not occur in the end, no one is forecasting a downturn today, and new concerns are increasingly arising due to the overheating of the economy.
During Biden’s presidency, the US GDP grew by 8 percent, twice as fast as, for example, the European economy and ten times (!) faster than Japan. Last year, growth was 2.5 percent, and a similar pace is expected this year in the critical year of the presidential election. The stock markets are soaring: last year, the exchange rates jumped by an average of 26 percent, the Nasdaq, for example, by 43 percent. The upward trend continued this year as well. Under Biden, 15 million new jobs have been created so far, as a result of which unemployment has halved – below 4 percent. The rate of increase in consumer prices has decreased significantly: from the shockingly high level of 9 percent in 2022, it fell to below four percent last year, and the downward trend is expected to continue this year as well.
But for his spectacular economic results – including avoiding recession and passing laws promising massive positive economic effects (infrastructure, green energy, domestic chip production) – President Biden does not receive the political recognition he was hoping for from the voters.
According to surveys, only 40 percent of voters believe that Biden is managing the economy well. Donald Trump, the presidential candidate of the Republicans, is considered by a considerable number of people to be suitable for managing the economy. From this point of view, an unfavorable circumstance for Biden is that the voters in the “swinging” states, which will certainly decide the presidential election, focus more on economic matters compared to the national trend.
Macro-micro economic contrast
How can the contradiction between the apparently strong macroeconomic performance and the lack of political recognition be explained? Mainly with inflation. On a micro level – in the eyes of the average American consumer – the fiscally undisciplined Biden is considered an “inflationary president” and not unwisely.
Although the inflation rate slowed significantly last year, consumer prices are on average 20 percent higher than when Biden took office. As the White House celebrates falling inflation rates, consumers are seeing prices continue to rise (albeit at a slower rate than before) across a wide range of products and services. The vast majority of consumers blame Biden for the financial pressure on families, especially due to skyrocketing food prices.
Bad news for Biden is that, just over half a year before the presidential election, more than two-thirds of voters subjectively feel that “inflation is moving in the wrong direction.” In the first quarter of the year, the price increase was 3.5 percent, which is much higher than the 2 percent targeted by the Fed. The Fed is therefore in no hurry to reduce the high – over 5 percent – base rate, which is another bad news for the Biden campaign.
Consumer interest rates are also at a high level. For example, the average annual interest rate on credit card loans has already risen to 25 percent. The interest rate on a 30-year real estate loan reaches 8 percent, which makes it extremely difficult to buy real estate, which the Republicans make the most of in their election propaganda. (“THE Bidenomics is pricing millions of people out of the American dream,” says the Republican National Committee advertisement.)
Biden’s macro successes here or there, the economic mood of the average American voter remained rather gloomy. This is faithfully reflected in the consumer confidence indices, whose level has fallen back to the level of the 2007-2009 financial crisis in the last two years. In a high inflation environment, the average earnings of workers practically stagnated under Biden.
The vast majority of Americans do not feel comfortable in their own skin, they feel extremely bad in this fatally polarized country. Politically, an “unhappy nation” aptly described the situation Wall Street Journal. Yet he promised the opposite during his presidential inauguration: “social unity,” “a return to normality” and “healing the soul of the nation.”
Beyond the economic effects
THE New York Times / Siena College according to a recent survey, two-thirds of American voters believe that the country is on the wrong track under Biden’s presidency. Almost half of them feel that the president’s policies are also personally disadvantageous to them. In addition to microeconomic effects, several other factors play a role in political ill-feeling. For example, crime has become rampant in big cities (including organized shoplifting), and tent camps for the homeless are rampant in city centers.
Or there is the illegal immigration unleashed on the Mexican border, against which, according to general opinion, the Biden administration did virtually nothing for three years due to strong political pressure from the progressive wing of the Democratic Party. During Biden’s presidency, the number of illegal border crossings – breaking all previous records – reached more than six million, which made immigration one of the most important domestic policy issues in this year’s presidential election. This is clearly the far right ITSELF, and their leader, Donald Trump, is grist to the political mill.
Another effect that nullifies macro-level economic success: Joe Biden’s advanced age. For decades, America has been drifting towards gerontocracy, the political rule of the old. Along with migration, Biden’s age (81) and increasing physical/mental decline have become another central theme of the presidential election.
The voters see the trouble with their own eyes. Three-quarters of them believe that Biden is too old to take on a new presidential term, that he no longer has the mental and physical abilities necessary for the presidency. Biden would be 86 years old in the final year of his presumed second presidency. (It doesn’t help Biden that his main challenger, Trump, who is four years younger, is not the same, he also has cognitive “misfire” more and more often and his already poor oratory vocabulary is noticeably narrowing.)
A dangerous political game?
When it comes to dealing with the four big issues that concern voters the most – economy, inflation, illegal immigration, abortion – voters prefer Biden over Trump only with regard to abortion.
This is surprising because Trump is considered a serial Republican election loser in the period after winning the 2016 presidential election, against whom, in addition, multiple criminal proceedings consisting of nearly a hundred charges are ongoing.
Biden can hope that his chances of winning will improve if Trump is found guilty before the presidential election, which is unlikely.
So Biden is far from certain to win against Trump in the upcoming presidential election. (With few exceptions, the incumbent president is usually re-elected if he runs.
Only three of the thirteen post-World War II presidents failed to win re-election, most recently Trump in 2016.) According to the latest polls, if the presidential election were held now, Trump would win, although his advantage is measured within the margin of statistical error.
But it is a bigger problem for Biden that Trump has the flag in those half a dozen “swing” states (Michigan, Pennsylvania, Wisconsin, etc.) where the presidential election will certainly be decided again.
Rebuilding the victorious Biden electoral coalition in 2020 could be an additional headache. Especially because there is a statistically significant attrition among the crucial black and Latino minorities in the surveys.
Many people in America feel that President Biden, who seems fatally weakened by his advanced age, is playing a dangerous and irresponsible game in which he puts his personal vanity above the interests of the country. In the November presidential election, Biden can easily lay the groundwork for Trump’s victory if he does not cede the presidential nomination to a younger, charismatic Democratic leader, of whom there are several in the party’s ranks.
However, the probability of this is low. (On the Democratic side, there are also serious concerns about the televised debates between the presidential candidates, which, according to general opinion, favor the much more telegenic Trump. Therefore, it cannot be ruled out that Biden – in an unprecedented way – might avoid the public, face-to-face debate, which of course would have the political odium.)
However, in the case of a significant deterioration of Biden’s chances, it cannot be completely ruled out that the Democratic party oligarchy will force Biden to withdraw at the presidential nominating convention in August.
With the possible return of Donald Trump, the political stakes are extremely high for America and the world.
Is Joe Biden the only one who doesn’t see this?
The author is a former senior economist of the World Bank.
