Inflation is a key US election issue
While inflation may be cooling overall, the memory of it remains painful for US voters
THE US economy is doing well, yet voters aren’t impressed by President Joe Biden. Some 58 per cent of Americans disapproved of the president as at Feb 28, according to a polling tracker by Reuters and Ipsos.
This negativity towards Biden may boil down to inflation, which will be a key issue to watch in the US election this year.
Americans have plenty to cheer about. The US economy grew 2.5 per cent last year, accelerating from a 1.9-per-cent expansion the year before.
US joblessness, which came in at 3.7 per cent in January, has remained below 4 per cent for two consecutive years. That is the longest period in over 50 years that unemployment has stayed at what some consider a healthy level.
Investors are cheering these data points. The S&P 500 index has soared by over 8 per cent this year to hit a record high on Mar 1. Investors expect the Federal Reserve to cut interest rates before voters go to the polls in November.
Voters ought to be feeling similarly confident. After all, polls show voters rank the economy as among the most important issues facing the country.
Political scientists have also pointed to a strong correlation between a president’s economic performance and political fortunes. As the saying goes: “It’s the economy, stupid!”
It’s unusual to find a case of an incumbent president losing a bid for re-election when the economy is booming. The reverse is also true: a recession often assures a president is not re-elected.
Why, then, is Biden polling poorly?
One number that may provide an answer is the inflation rate. It’s true that inflation has eased substantially – from 6.5 per cent in Dec 2022 to 3.4 per cent in Dec 2023 – but things may not be as simple as that when it comes to the average voter, who thinks about inflation over a long time.
Indeed, prices for everyday necessities remain high. This is putting pressure on low and middle-income consumers.
Even the fast-food franchise McDonald’s, long associated with low prices, has become a regular target for social media users complaining about inflation as they lament the rising cost of the popular Big Mac meal.
While inflation may be cooling overall, the memory of inflation remains painful. The result is that consumers remain gloomy about the economy despite strong growth and lower inflation.
That said, the growing number of jobs and rising wages could yet counter the impact of inflation by November. President Biden may be hoping voters have short memories.
