With just five weeks to go before the midterm elections, the country is experiencing a perfect economic storm — with rising inflation, rising interest rates and a falling stock market — putting Democrats in an increasingly dangerous political position.
In response to disappointing inflation in August report — which noted last month that the cost of food, shelter and healthcare continues to rise — the Federal Reserve announced last week that it would raise interest rates by another 0.75 percent to cool the economy, raising the possibility of a recession and raising fears of an economic downturn.
This sent the stock market – which Americans sensibly use to gauge the health of the economy – on its course Deepest point since President Biden took office. The market is now down more than 20 percent for the year, and more than $9 trillion in US household wealth has been wiped out.
As a result, Gallup’s Economic Confidence Index — which measures how good or bad Americans think the current economic climate is — has just hit one of its lowest points in 30 years. Eight in 10 Americans rate the economy as “fair” or “poor,” and more than two-thirds say the economy is deteriorating.
With rising stock prices palpable on all Americans and the stock market visibly deteriorating — reducing Americans’ retirement accounts and savings as a result — it is becoming increasingly likely that voter concerns about the economy will lead to a referendum on Democratic leadership in the November.
The Republicans, for their part, are increase efforts linking the deteriorating economy to democratic politics. By turning the nation’s attention back to economic issues like inflation and the stock market in the final stages of the campaign—and by undermining Democrat attempts to uplift societal issues like abortion rights and democratic values—the GOP can deaden the Democrat post.Roe v. calf political dynamics.
This perfect storm is already generating a surge in support for Republicans nationally. The GOP now leads Democrats in the general vote by 5 points, 51 percent to 46 percent, according to a new ABC/Washington Post poll.
The economy – and inflation in particular – is still far ahead of the country highest priority for the upcoming midterm election. In the same direction, a new one New York Times/Siena poll found that a majority (49 percent) of voters prioritized “economic issues like jobs, taxes, or the cost of living,” while 31 percent prioritized “social issues like abortion, guns, or democracy.”
Of concern to Democrats, a majority (52 percent) of voters agree with Republicans on the economy, versus 38 percent who said they agree with Democrats — a 14-point advantage for the GOP. Republicans also have a 19-point lead over Democrats in confidence in specifically handling inflation, according to the latest ABC News/Washington Post poll.
Regardless of how culpable we find President Biden and the Democrats for this relentless inflation – caused by a combination of the Covid-19 pandemic, the war in Ukraine and the multitrillion-dollar pandemic relief packages passed by the last two administrations Dollar – Their inability to develop a reassuring message about the economy and rising prices is their most glaring political failure.
Americans’ attitude toward the Democrats’ signature bill—incorrectly dubbed the Inflation Reduction Act—is evidence of this. Only one in four Americans believed the law would live up to its name and reduce inflation Morning Consult survey. Remarkably, many (one in three) thought this would make inflation worse.
According to a recent study, rising prices cause financial difficulties for the majority of Americans (56 percent). Gallup poll. But after last month’s disappointing CPI report came out – which caused the Dow Jones Industrial Average to fall more than 1,200 points – President Biden went for it all The recent Democrat spending bill, which showed struggling American families how little the party has on the issue.
While the economy is unlikely to improve significantly ahead of November’s midterm elections, things could take a turn for the worse.
The release of the personal consumption expenditure (PCE) index of prices – the Fed’s preferred indicator of inflation – on Friday showed that inflation rose even more than expected in August, despite attempts by the Fed to slow the economy with rate hikes. This could prompt the Fed to raise interest rates again, causing markets to fall again.
Other An ominous development for Democrats is the recent surge in gas prices, as the party’s summer poll gains directly correlated with gas prices falling from record highs.
Prices at the pump hit a low of $3.67 a gallon in mid-September and have since ticked to a national average of $3.74. During the same period, President Biden’s approval rating plummeted POLITICO/Morning Consult poll.
Over the summer, Democrats enjoyed a brief period when the national issue agenda was favorable to their party — gas prices were falling, there was cautious optimism that inflation had peaked, abortion rights were the focus of policy talks and the national media focused on the investigation into Donald Trump.
However, the political winds are no longer blowing in their favor, and the country’s metastasizing economic woes may well result in an unexpectedly large number of Republican wins in the House of Representatives and cost the Democrats control of the Senate.
Douglas Schoen is a political consultant.
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