Welcome to the policy chat at FiveTyeight. The text was edited below.
nrakich (Nathaniel Rakish, prominent election analyst): For a long time, the economy was seen as a great responsibility for President Biden in an attempt to re -election. The inflation increased in 2021 and 2022, and its peak was in a Average 9.1 percent last June. In the same month, Average gas prices It exceeded $ 5 per gallon. In the second quarter of 2022, the already GDP is already It decreased by 0.6 percent. It was not surprising, then, that only 28 percent of Americans agreed to the way Biden was dealing with the economy in A. July 2022 Coinibiac University poll.
But in recent months, economic indicators were looking, and Biden began to file the case His economic policies are working. However, the Americans do not seem to change their perceptions of his supervision of the economy. (the The last QUINNIPIAC poll Put his approval classification on the economy by 36 percent.) So for the Slack Foothirtyeight chat today, I would like to explore the reason for this, and whether Biden has any hope to make the economy a profitable issue for him in the elections next year.
First, let’s put the scene: What are the indicators that you say now about the health of the economy?
Ameliatd (Amelia Thomson-Deveaux, a great correspondent): For an economy claimed to be on the brink of stagnation More than a year nowLooks well! The real wages are In the end it rises faster than inflationLabor market Weakening a little But it is still somewhat strong for workers and consumers Spend At a healthy rate.
Monica Pots (Monica Pots, Supreme Policy Correspondent): What Amelia said. For beginners, the labor market is still really strong. Unemployment in 3.8 percentThe wages rise. Economic inflation, In a little more than 3 percentAnd finally cooling, too. It seems that the federal reserve succeeds in its high work in reducing inflation without causing a lot of unemployment.
There are other signs as well. For example, the law to reduce inflation Stimulating investment in manufacturingWho is the White House It was more than happy to refer to.
Ameliatd: In many ways, it seems that the economy finally returns to normal prenatal-but with the conditions that are more suitable for workers. This legendary “Soft landing“It actually seems to come to pass.
Of course, economics stagnation predictions are never reliable. (This is FiveTyeight Serrain, which has been stirred for time.) Things can always turn-for example, as Monica recently wrote, the payment of student loans is about to restart, which means that millions of Americans have less money to spend with resuming their monthly payments. But it is still a more pink condition than Many people They expected Even a few months ago.
Giliotmores (G. Elliott Morris, editor -in -chief of Data Analytics): This is true. Some of the DOOMER predictions of the recession were never reliable, however Total economic expectations She is still awake in what people say a year or even six months ago. However, there are some non -hot indicators. Real estate loan and Useful interest rates We continue to climb, for example, and Personal savings rate It is almost at the lowest level ever. This is a different dimension for “Economy”, for example, the annual wage growth, but it is important.
Ameliatd: Right, Elliot, and Not clear The Federal Reserve is done with high prices. Many depend on what the inflation data looks at August 2023 when it appears later this week.
Monica Pots: Yes, I think the hints to a really big and continuous problem asking voters about their feeling about the “economy”. What this term means for people can differ greatly. Does this mean the amount of money they earn, or the amount of what they spend on things like housing and food? Does this mean if they can bear the costs of day care? There is a great contrast in what people feel about the economy – and the various ways that the federal government can have an impact on these things.
Ameliatd: Another question is whether the spending of consumers will start on the numbering – which was a possibility as people Spend Their friendly savings. But in general, there are other signs that Americans feel well about their financial resources. For example, a The last iPSOS poll I found that the share of Americans who say they have enough money to cover unplanned expenses (54 percent) higher than this time last year (40 percent). Less people also say that after paying their bills, they have no enough money to spend on the things they want.
NRAKICH: However, though, Biden is facing a problem to persuade voters that “Pytenex” is working. Why?
Monica Pots: To start initially, Biden inherited a really strange economy. Covid-19 was closed in severe and dramatic stagnation, but then the economy began to wear. But people’s behavior has also changed. More people were working from home and moving, and they had money to spend chains and supply chains were slow to restart. So the Americans were generally sour from the economy of the time when he took office.
The recovery was suffering from high inflation, as noted at first, Nathaniel, and much of the Biden administration on economic policy is a kind of slow policies, behind the scenes that voters did not really notice. Although inflation cools, the prices are still much higher than they were before the epidemic; Bayers still see interest rates much higher; etc. So I think many of them are that Americans are generally not satisfied with the new natural that we find ourselves.
Gelliotttmorris: I think the last point is really good, Monica. The share of people who tell opinion polls that The broader economic situation is weak It is still about the highest since 2018. Initially, this seems difficult with the pink economic indicators that we talked about. But I believe that people can have long -term memories about economic growth and remember the time at lower prices.
A lot of discussion on this topic is linked to tracking the annual change in the consumer price index, the labor market or what you have. But if you take a longer point of view, for many families, things are permanently more expensive now. Even if their wages rise, I doubt that they enjoy the spending of 15 percent in the grocery store more than they were before the epidemic. It will take some time for those memories to fade.
Of course, this is just my theory.
Ameliatd: I mean, some people believe that the economy is improving. CIVIQS tracking poll It indicates that the Democrats, in particular, are likely to say that the current state of the economy is somewhat or very good (63 percent) of what they were (53 percent ago). But this is not the question you are completely, Nathaniel – not only if people think the economy is improving, whether people see improvement and say, “Yes, Biden achieves that!” There, Biden does not seem to get a lot of support. According to Wall Street Journal surveyFor example, the share of registered voters who say they have agreed to the way Biden has dealt with the economy since April.
Which reaches my theory about what is happening. I am not sure that voters will be given from Biden credit for improving the economy, especially since increased inflation occurred under his watch. It is not as if it could come and say, “Look at this chaos that my ambassador left for me.”
but! This does not mean that this transformation of events is not good for him, because the alternative – the sour economy – can really harm it.
NRAKICH: Interesting, Amelia. Do you think that we have a poor economy or two years ago for Laiden? He can never wash it, even if he repaired?
Ameliatd: I don’t know about permanentBut as Elliot said, prices are still higher. The Americans are increasingly convinced that these high prices exist to remain. So the fact that people began to get used to those high prices and say that the economy may improve may be an indication that Biden is evading a bullet. So it depends on how it is framing. On the one hand, people do not give the credit in Biden, and this is unfortunate for him. But on the other hand, it seems as if we might have an ordinary economy heading to 2024, which you can see as a great victory given the amount of economic volatility that we have seen since the epidemic began.
Monica Pots: I don’t think the prices will decrease, but it is also possible for people to get used to them. So it can hurt Biden less, as Amelia said. This leaves room for other issues that voters are interested in improving the importance.
NRAKICH: Question, though: What is the amount that is really a political victory? Historically, what is the relationship between the health of the economy and the chances of its presidential re -election?
Ameliatd: Will Biden “Bidenum” love to appear in high school history books? certainly. But what he really wants is to win his re -election, and this is less likely to happen if people think that the economy is getting worse.
Gelliotttmorris: Historically, we know that actual economic conditions are well linked to the results of the presidential election. If the state of the economy is widely positive compared to a year or two, then the current party tends to get a boost. Of course, economic indicators do not fully predict the results of the election, but have a remaining impact.
The good news of Biden on this two parts is two parts: First, voters tend to start making these reviews retroactively closer to the elections. Second, they are See only a few years in the past. This means that there is time for the things that improve it, and to parity.
Bad news, nevertheless, is that there is still time to wrap against him!