President Biden's attempt to sell Americans on his role in the post-pandemic economic recovery has failed, even as the U.S. economy defies the odds and expectations of experts.
Despite widespread fears earlier this year that a recession was imminent, the U.S. economy is on track to end 2023 with low unemployment, steady economic growth and significantly lower inflation.
But these remarkable top numbers have done little to improve Biden's standing with voters or their views on the economy.
“You don't expect sentiment and economic fundamentals to always be perfectly aligned, but they're really very wrong,” said Matt Darling, senior employment policy analyst at the Niskanen Center, a nonprofit think tank.
According to a Monmouth University poll released last week, Biden's approval rating has fallen to a record low of 34 percent, with nearly 70 percent of respondents disapproving of his handling of inflation. More than half of respondents disapproved of Biden's track record on employment despite having a historically strong job market.
November's unemployment rate of 3.7 percent is just 0.2 percentage points above pre-pandemic levels, which marked the lowest level of unemployment in five decades. The annual inflation rate also fell to 3.1 percent last month from a peak of 9.1 percent in June 2022, according to the Labor Department's Consumer Price Index (CPI).
U.S. gross domestic product (GDP) is on track to rise close to pre-pandemic levels, far faster than the minimal or even negative growth forecast by many economists. And the economy posted these strong sales numbers amid rapid interest rate hikes by the Federal Reserve, which bank officials acknowledged could tip the economy into recession.
Biden and his allies have kept the economy at the center of the president's re-election campaign, which is likely to end in a rematch against former President Trump, the front-runner for the Republican Party's nomination. According to poll tracker The Hill/Decision Desk HQ, Biden is currently two percentage points behind Trump.
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The Biden administration and its campaign have tried to reverse the trend by touting the benefits of “Bidenomics” – a loosely defined phrase that refers to the president's passage of trillions of dollars in stimulus and stimulus aid and the nature and Focuses on how these packages have benefited the economy.
“When President Biden took office, he inherited from Donald Trump an economy that was rigged for the ultra-rich and in shambles. “But thanks to President Biden’s leadership, the U.S. economy has consistently defied expectations: millions of jobs have been created, inflation is at its lowest level in more than two years, and costs to the American people have fallen,” said Campaign spokesman Kevin Munoz last week after another strong inflation report.
They have also largely refrained from criticizing the president's economic record, accusing Republicans and the media of stoking discontent for self-serving reasons.
In brief remarks Saturday, Biden expressed confidence in the economy while criticizing reporters for the way they covered it.
“It's all good. Look. Start reporting on it properly,” Biden said when asked about his economic outlook for 2024, according to a transcript released by the White House on Sunday.
But experts warn that touting strong economic data amid growing frustration with the economy risks backfiring on Biden and making the backlash even worse.
“People’s individual experiences in the economy should not be viewed as wrong just because they conflict with macroeconomic statistics,” said Kathryn Ann Edwards, an independent economic policy adviser.
“The economy is doing well and people feel like they are not doing well. Well, give it a name: It's about being left behind, and it's said over and over again, “You're being left behind.””
Most economists attribute much of their frustration to the persistence of high inflation. Although inflation has eased, it is still well above the Fed's annual target of 2 percent. Many Americans have also been feeling the frustration of rising prices for years.
The steep rise in food and energy prices, largely due to the war in Ukraine, is also placing a serious burden on lower-income households, which spend almost all of their income on essential goods.
“People can understand over time that the value of homes and cars increases,” said Gordon Gray, vice president of economic policy at the American Action Forum, a right-leaning nonprofit research organization.
“But at the end of the day, people want to pay with eggs and gas, so to speak, what they’ve always paid – or at least close to it.”
The pandemic also deepened the decade-long housing affordability crisis in the U.S., as construction came to a screeching halt and government stimulus programs fueled a home-buying frenzy. After months of record-breaking home price and rent increases, the Fed's rate hikes pushed mortgage rates above 7 percent for the first time since the 2007-2008 recession.
“Inflation allows many people to name frustrations that come from many sources. And we've known for some time that there are a lot of people who have almost no financial cushion,” Edwards said.
While Biden and his allies acknowledge the toll of high inflation, they are quick to note how much prices have risen in other countries with even weaker economies. Wages also rose rapidly throughout most of Biden's time in office, particularly for workers in lower-paying industries and for those affected by the pandemic.
“We are seeing very large wage increases in some industries, both due to the tight labor market and the fact that employers have had to compensate their workers for jobs that were relatively unattractive and less flexible,” said Julia Pollak, chief economist at ZipRecruiter.
While millions of workers may have received higher wages compared to before the pandemic, Pollak said the legacy of the disruption could influence sentiment toward the economy.
“We just went through this massive whiplash reversal, so everyone has had good times and bad times since the start of the pandemic,” Pollak said. “When you have a situation where everyone has been through bad times, everyone is grumpy and angry at someone.”
Some Americans lost jobs they loved or businesses they ran, only to later find less fulfilling sources of income. Many struggling families experienced financial security for the first time in their lives as a series of federal rescue programs kept them afloat but left them drowning when aid ran out. Nearly every industry has been transformed by the pandemic — for better or worse — and amid new complications caused by COVID-19.
“This is the best we could ever hope for from the U.S. labor market, and there are so many things it's not doing,” Edwards said.
“It doesn’t make every American worker sick. It does not provide paid leave for every American worker. It does not regulate or improve the working conditions of people in the retail and service sectors. This is not about helping people who have been convicted of a crime get a job.”
Biden may struggle to convince voters about the economy as the scars of COVID-19 linger on millions of Americans, but there are early signs that 2024 could make that argument easier.
Fed officials expect to make a series of interest rate cuts next year that could ease pressure on the economy and boost spending. Several consumer sentiment surveys rebounded in December as the Dow Jones Industrial Average hit new records and gasoline prices fell below $3 a gallon in some places just before Christmas. And a wave of new rental housing is expected to lower rents across the U.S. and provide relief to cash-strapped families looking for affordable housing.
“We still have a lot of work to do, but we are on the right track and making progress in implementing President Biden's agenda, which stands in sharp contrast to congressional Republicans' plans to cut taxes on the wealthy and big corporations “while also increasing health care and prescription drug costs for hardworking American families,” Jared Bernstein, chairman of the White House Council of Economic Advisers (CEA), said in a statement.
Some experts remain skeptical that Biden can turn the economy into a selling point after years of high inflation, even if the U.S. can bring inflation down without falling into a full recession.
“They need to focus on other things that are contrary to the former president because a legacy of inflation is irredeemably unpopular and they're going to ride uphill with it, and pointing to aggregate statistics can't wish that away,” Gray said.
But as Biden tries to give Trump an edge, Pollak argued he could use his rival as inspiration.
“Trump has always held up the economy, and for better or worse, that has changed people’s perceptions of this job market,” she said. “Politics is the art of demanding credit and avoiding blame. I think Trump did a better job on the economy.”
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