A CNN poll released on Sept 7 said more than half of those polled believe Mr Biden’s policies are making the economy worse.
Media company RealClearPolitics’ (RCP’s) poll of polls, which offers an average of many opinion surveys, shows that only 38.1 per cent of Americans approve of Mr Biden’s handling of the economy. His overall rating across many different issues is better, but still low, at 42 per cent.
It is not the kind of thing that a president hoping to be re-elected wishes to go up against. In September, the Biden campaign launched a US$25 million (S$34 million) drive in a handful of states – like Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin – where the 2024 election will be keenly contested.
The aim is to defend “Bidenomics” – a set of economic policies meant to directly aid everyday Americans rather than “trickle down” benefits from the wealthy.
Three big pieces of legislation were enacted to accomplish this – the infrastructure law that increased road and bridge building; the Chips and Science Act, which nurtures the domestic semiconductor industry; and the somewhat misleadingly named Inflation Reduction Act, which actually funds clean energy projects.
Indeed the trio, along with the careful rate-setting by the Federal Reserve, may have been what kept the widely expected full-fledged recession at bay.
Effects can be seen on the ground. New investment projects worth a half trillion dollars have been announced since last November. Inflation, which soared to 9 per cent in 2021, now hovers around 3 per cent. Unemployment, which was around 6 per cent when Mr Biden took office, now stands at under 4 per cent.
Economists spy a virtuous circle in motion – wages have risen, which means workers have money to spend which, in turn, helps businesses to expand and hire more workers, which results in better pay and more money for workers to spend.
Yet people are not feeling the bounce. Many still say they are struggling to cope.
Mr E.J. Antoni, an economics analyst at the Heritage Foundation, a right-leaning think-tank, channelled these sentiments when he spoke about a “radical disconnect between Washington’s ruling elites and working-class folks”.
“The Bidenomics agenda caused inflation, which means prices everywhere rose, and that caused many middle-class households to change their purchasing habits to stretch the family budget. Instead of buying a more expensive cut like fillet, the family may opt for ground beef, or even a less expensive meat altogether, like chicken.
“But more people choosing relatively less expensive meat increases the demand for that meat, which further drives up the price. Thus, things that were disproportionately bought by lower-income consumers have risen in price not only because of inflation, but because of this substitution effect.”
To tame the beast of inflation and bring it down to the acceptable 2 per cent, the Fed has raised interest rates by 525 basic points since March 2022 to a 5.25-5.5 per cent target range. It was one of the steepest hiking cycles in four decades.
Mr Antoni dissected the impact. “Consider that the monthly mortgage payment on a median priced home was under US$1,000 when Biden took office, but has now doubled to over US$2,000. That’s an extra US$12,000 a year for the same house.”
