Biden’s economy is booming but voters still see the gloom
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The contrast between how the economy is doing on paper and how it feels on the ground has made it difficult for Mr Biden to politically capitalize on what has been, by most measures, a historically strong economic recovery. , even after taking into account the price increase.
Understanding Inflation in the United States
Mr. Biden could take comfort in the last president who experienced a similar combination of strong growth and rapid inflation: Ronald Reagan. He, too, faced an economy struggling with rising prices and tight supply lines early in his tenure. He, too, initially struggled to convince Americans that the economy was recovering. Yet in 1984, his “morning in America” message led him to a landslide re-election victory.
There are important differences. Mr. Reagan took office near the height of the “great inflation” of the late 1970s and early 1980s, when interest rates were very high; by 1984, price growth and borrowing costs had both moderated. Economic growth also accelerated towards the end of Mr. Reagan’s first term, when most forecasters now expect growth to slow as the post-pandemic boom fades. And Mr. Reagan ran for re-election at a time when opinions on the economy were far less divided along partisan lines than they are today.
The conundrum Mr. Biden faces is evident in polls and surveys.
A Gallup survey conducted this month found that Americans view the economy more negatively than positively: only 29% said the economy was improving, while 67% thought it was getting worse.
Consumer expectations data produced by the Federal Reserve Bank of New York showed that a large portion of consumers expect to be financially worse off a year from now: 26.3% in December, down from 9, 9% at the end of 2019, before the start of the coronavirus. This change came as inflation expectations tracked by the same survey jumped.
Some of the gloom is inevitably tied to the long-running pandemic. While people held out hope that the economy would reopen and normal life would resume once vaccines were readily available, continued waves of infection prevented that from happening.
“A year ago there was a lot of optimism,” said Karen Dynan, a Harvard economist and former Treasury official in the Obama administration. “We had received the vaccines faster than we thought, and we thought our lives were going to be able to get back to normal, and people were just expecting the economy to get involved. And maybe that was a little naive.
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