by J.T. Young
Joe Biden is gaslighting America on the economy. His administration is trying to oversell what has underperformed for several reasons: First, the economy is the one issue that affects most Americans most significantly. Second, Biden is doing worse on virtually every other issue. Finally, time is short: the economy is about to get worse, and the election is close. The administration’s strategy is to get Americans to believe what they hear and doubt what they see.
Biden and his administration are loudly beating the drum on the economy. At a recent event in swing-state Wisconsin, the president told his audience:
Just last week, we saw the biggest jump in 30 years and how positive consumers are feeling about the economy. Things are finally beginning to sink in. We passed a lot of really good legislation. We knew it was going to take time for it to begin to take hold, but it’s taken hold now in turning the economy around.
The administration is hoping that repetition can trump performance and rhetoric displace reality. Despite his whistling past the graveyard, during Biden’s presidency, the economy has been tepid while inflation has been torrid.
This is what the economy has done over the last three years. In 2021, real GDP grew 5.8 percent, but that was the rebound effect from COVID’s (in Q2 of that year, it fell 28 percent) — and, even more, from lockdowns’ — effects in 2020: In statistics, climbing out of hole looks as though you’re jumping up. In 2022, the economy grew 1.9 percent and, in 2023, 2.5 percent. Tepid.
What really has been strong in Biden’s economy has been inflation. When he took office in January 2021, it was running at 1.4 percent. Two months later, it crossed the Federal Reserve’s 2 percent threshold at 2.6 percent, and it hasn’t retreated across since. It finished 2021 at 7 percent. It peaked in June 2022 at 9.1 percent (a 40-year high) and finished 2022 at 6.5 percent. It finished 2023 at 3.4 percent. In 2024, it started January at 3.1 percent — still well above the Fed’s 2 percent target. Torrid.
To summarize Biden’s economy: For working Americans, strong inflation has undercut the effect of mediocre economic growth.
So why is Biden insisting on making his case on the economy? For one thing, this is what politicians do, and it is especially what Biden does. The old adage is that those who can’t do teach; in politics, those who haven’t done spin.
For another thing, Biden doesn’t have anything to take credit for with average Americans; as a result, he’s doing worse with the American people on virtually everything else. On the economy, RealClearPolitics’ average of national poll results shows Biden with a 39 percent approval and 57.1 percent disapproval on the economy. As bad as that “minus 18” is on the economy, he’s at “minus 20.5” on foreign policy. On inflation, he’s “minus 25.2.” On the Israeli-Palestinian conflict, he’s “minus 20.8.” And on immigration, he’s “minus 30.8.” So, if Biden’s going to be positive about something, he’s got to pick what Americans view him less negatively on.
Plus, the economy’s about to start doing worse — so he needs to make what hay he can while the sun is as close to shining as it’s going to get. As evidence, the Congressional Budget Office is predicting the economy’s real growth to be just 1.5 percent in 2024. The reason for slowing growth goes back to that torrid inflation. When inflation began spiking in 2022, the Fed began hiking. It raised interest rates 11 times in just over a year, taking them from a range of 0.25–0.50 percent to 5.25–5.50 percent. And there they have stayed — and with Tuesday’s release of higher-than-expected inflation readings, there they look likely to stay for longer than the markets had hoped.
Such a rapid increase in interest rates is going to affect growth, and that effect is going to come in 2024. A worst-case scenario will be for growth to slow while inflation remains unacceptably high. It was fear over just such a scenario that sent the stock markets tumbling on Tuesday — the Dow’s worst drop in almost a year.
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J.T. Young was a professional staffer in the House and Senate from 1987–2000, served in the Department of Treasury and Office of Management and Budget from 2001–2004, and was director of government relations for a Fortune 20 company from 2004–2023.
Photo “Joe Biden” by President Joe Biden.
