WASHINGTON — President Joe Biden on Wednesday celebrated the one-year anniversary of one of his biggest legislative achievements yet, the Inflation Reduction Act, acknowledging lower inflation and still-low unemployment as part of a recovering economy.
Now all he has to do is convince Americans, who are largely convinced the economy is terrible.
“We have more jobs now than we did before the pandemic,” Biden said in a White House East Room filled with aides and supporters. “Inflation is now at its lowest level in two years… Wages are growing faster than inflation.”
Unfortunately for a president who is seeking re-election in 15 months, Americans continue to take a much more pessimistic view. in one recent poll by CBS News65% of respondents described the economy as ‘bad’ compared to just 29% who described it as ‘good’. The two words they used most often to describe it were “difficult” and “uncertain.”
Only 34% of Americans approve of Biden’s performance on the economy.
“The key is that real wages have fallen during his tenure,” said Douglas Holtz-Eakin, president of the center-right think tank American Action Forum and former head of the Congressional Budget Office. “They’ve gone up in the past few months, but by and large, all the people who’ve had a job haven’t fared any better.”
Improvements in the economy or in general living standards are often not credited to presidents, even when such improvements are a direct result of their initiatives.
President George HW Bush lost his re-election in 1992 largely because voters did not fully accept that the mild recession under his rule was over, despite statistical measurements suggesting so.
In 2010 and 2011, voters did not link the slowly recovering economy to President Barack Obama’s stimulus program, which, among other things, funded road construction projects across the country. In addition, most voters believed their taxes had increased even though Obama and the Democratic Congress cut payroll taxes by a third.
“I think the response to improving conditions is a lagging indicator,” said David Axelrod, a Democratic adviser on Obama’s successful 2008 campaign. “We certainly found that to be the case during the Obama years. But that effect is likely to be mitigated by the polarization of news sources, which is even more pronounced today than it was then.”
For several months, Biden and his White House staff have been more aggressively emphasizing the improving inflation figure — it’s now at 3.2% a year, compared to 8.3% a year ago — but they have little to show for it.
“I suppose the best explanation is that prices are much higher last year than they were then, despite inflation slowing down last year [Biden] took office,” said Mark Zandi, chief economist at Moody’s Analytics. “This includes staples like food prices, gas and rent.”
And while the Inflation Reduction Act brings dramatic savings to Medicare beneficiaries and offers consumers rebates and tax credits for energy-efficient home renovations and electric vehicle purchases, nothing in it really addresses the day-to-day expenses most Americans incur—groceries and gas.
Republican pollster Neil Newhouse said voters would not change their minds based on monthly statistical reports, but based on their real-world experiences at the checkout.
“There is a significant lag between when inflation slows and when Americans believe inflation is no longer a problem. That’s why Biden is still paying a heavy price,” Newhouse said.
Still, Zandi said if current trends continue, Biden could be in better shape when it counts when voters start voting.
“The most likely scenario is that inflation will be even lower and real compensation higher by this time next year. At the same time, unemployment will still be low, certainly below 4%,” he said. “This improving economy should slowly but steadily seep into the minds of voters and be a tailwind for the President’s re-election.”
“Of course, this confident outlook comes with a big risk,” he added.