As he celebrated the impressive May jobs report on Friday, Joe Biden went to great lengths to paint a rosy picture of the US economy. While acknowledging the difficult reality of high prices caused by near record-high inflation, Biden pointed to the 390,000 jobs created last month to argue that the US is in a strong economic position.
“I know that even with today’s good news, a lot of Americans remain anxious, and I understand the feeling,” the US president said. “But there’s every reason for the American people to feel confident that we’ll meet these challenges.”
But as of now, much of America does not seem to be buying the optimistic vision that Biden and his team are selling.
Polls show Americans are viewing the US economy with a growing sense of pessimism, as experts warn of a potential recession. Despite the White House’s renewed efforts this month to allay Americans’ concerns, high prices and economic uncertainty are weighing heavily on the minds of many voters. With less than six months to go until the midterm elections, the odds of a Republican rout in November appear higher than ever.
Americans who started taking notice of rising prices last year are now feeling the brutal impact of inflation on their family budgets. Gas prices are at record highs and continuing to climb, partly due to the war in Ukraine. Wages have gone up in the past year, but those gains have been wiped out by inflation. While average hourly earnings increased by 5.2% over the past 12 months, the latest US inflation report showed prices rose by 8.3% from a year earlier.
That sticker shock has marred Americans’ views of the economy. A Gallup survey taken last month found that only 14% of American adults consider economic conditions to be “excellent” or “good”, marking the lowest rating during the pandemic. The cost of living ranks as one of Americans’ top concerns, with a recent Pew Research Center survey showing that 70% of US adults view inflation as a very big problem for the country.
Biden and his advisors are clearly aware that concerns about the economy could be a heavy liability for Democrats in November, and they are taking steps to improve Americans’ outlook. The White House announced this week that it was launching a month-long campaign to highlight Biden’s economic accomplishments since taking office.
To kick off the new effort, Biden wrote a Wall Street Journal op-ed highlighting his plan to combat inflation. The president also met Tuesday with the chairman of the Federal Reserve, Jerome Powell, and White House officials have made dozens of television appearances in the last week to highlight the best elements of the US economy.
One of those television appearances included a mea culpa from Treasury Secretary Janet Yellen, who acknowledged the White House’s previous claims that inflation would be “transitory” had been proved wrong.
“I think I was wrong then about the path that inflation would take,” Yellen told CNN last week. “As I mentioned, there have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that I didn’t, at the time, fully understand. But we recognize that now.”
The Federal Reserve is now taking aggressive steps to slow the pace of inflation. The central bank announced last month that it would raise its benchmark interest rate by 0.5 percentage points, marking the sharpest increase in more than 20 years. Several more rate hikes are expected in the coming months.
Increased interest rates often foreshadow a recession, and more economists are now warning of that possibility. Lloyd Blankfein, the former CEO of Goldman Sachs, said last month that the country now faces a “very, very high risk” of a recession, he added that it was not inevitable at this point.
Amid this escalating anxiety, Biden has made a point to emphasize the independence of the Federal Reserve, saying he will not criticize or interfere with Powell’s efforts to tame inflation.
“The Federal Reserve has a primary responsibility to control inflation,” Biden wrote in his oped. “My predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation. I won’t do this. I have appointed highly qualified people from both parties to lead that institution.”
Biden’s oped seemed to reflect how his hands are tied when it comes to inflation. After all, the Federal Reserve has the power to set interest rates, and Congress has the ability to pass legislation that could help Americans weather the storm of high inflation.
In his oped, Biden again called on Congress to pass a bill to lower the cost of utility bills, prescription drugs and childcare. But Biden’s Build Back Better Act, which included many of those proposals, failed in the evenly divided Senate, and progress to pass asmarted-down version of the legislation has been slow.
“I think it does reflect his limited options. Inflation is caused primarily by monetary policy, and he cannot control the money supply,” said Henry Olsen, senior fellow at the Ethics and Public Policy Center, a conservative thinktank. “Most of what he could do is provide more leadership and push for Congress to act.”
Faced with that difficult reality, Biden and his team have instead pursued a strategy of trying to convince Americans that the economy is in better shape than it seems by looking at gas prices and grocery bills. The president takes every opportunity to remind Americans that the unemployment rate is just 3.6%, which is near a half-century low.
Of course, the job market has been strong for months, and in that time, Americans’ views on the economy have only worsened. Biden’s strategy to persuade Americans that they are better off than they think – even as many people are being forced to make difficult financial decisions – could be quite risky.
“What you’re seeing every day is things that you have to purchase going up in price,” Olsen said. “There’s kind of a presidential strategy of, ‘Be grateful for what you have, rather than what you don’t.’ That’s just not going to work politically.”
Looking ahead to November, Biden is running out of time to change voters’ minds about his economic accomplishments. Biden’s approval rating has been mired in the low 40s since the fall, and for more than 70 years, no president has substantially improved his approval rating in the six months before a midterm election.
Given the political environment, election forecasters are increasingly confident about the likelihood of a Republican wave in November. The Cook Political Report updated its prediction for the House last week, saying Republicans are now expected to gain a net of 20 to 35 seats, which is far more than the party needs to regain control of the lower chamber.
To Olsen, the Cook Political Report’s latest prediction seems too optimistic for Biden and his party. “Democrats should be lucky if that’s all it is,” he said. “History strongly suggests that we’re looking at a historic shellacking.”