Another Round Of Concerning Inflation News

This morning’s new inflation numbers confirm the trend we’ve been seeing the past couple of months, that inflation continues to hover well above 3%. Our trending chart shows year-over- year inflation coming in at 3.4% and with the new Presidential Inflation Rate ticking up to 19.9% — almost a 20% cumulative price increase since Biden took office. Today’s report means 11 months in a row of inflation staying at or above 3%. Additionally, it reflects that since December, prices have risen 2.6%. In contrast over the same time period, weekly wages have increased only 1%.

Earlier this week, prior to the new report, Federal Reserve Chairman Jerome Powell indicated he is taking a wait-and-see approach: 

“We did not expect this to be a smooth road, but these were higher than I think anybody expected…We’re just going to have to see where the inflation data fall out.”

With the clock ticking down to the election, this is not the news the White House wants, nor is it where they expected to be at this point. This report complicates the Biden team’s economic narrative that the President’s policies are working.

Afghanistan: The Watershed Moment For Biden Job Approval

In the leadup to Iran’s first-ever direct attack on Israel, President Biden said that US support for Israel was “iron clad.” But as Israel is ready to move forward to defeat Hamas in Rafah, the last stronghold of Hamas, the President is threatening to halt weapons shipments if they proceed. This announcement comes as US citizens are being held hostage.

Our latest numbers for Winning the Issues (April 27-29) showed that even before this week’s announcement, the president’s job approval on foreign policy (35-55 approve-disapprove) was struggling at the same scale as his overall job approval (38-55) and economic job approval (37-56). Disapproval with his handling of foreign policy is not limited to Republicans; independents disapprove of by more than 2:1 (26-63).

The impact of the administration’s decision may impede Israel’s ability to defeat Hamas, with parallels being drawn with the disastrous withdrawal from Afghanistan in August 2021. From our trending of Biden job approval, the Afghanistan withdrawal was a watershed moment. As shown in the trend chart, this was the moment in which his job approval took a hit from which it has never recovered.

His job approval went from 52-40 in July 2021 — prior to the Afghanistan withdrawal — to 46-44 in September 2021. His job approval was declining prior to Afghanistan, but was still in positive territory. But from that point forward, his job approval deteriorated. Other factors like skyrocketing inflation locked in the disapproval in the months after that, with disapproval going over 50% in May 2022. However, the breaking point in his job approval can be traced back to Afghanistan.

Israel’s Prime Minister Netanyahu said, “If we need to stand alone, we will stand alone.” History will judge the impact of the administration’s decision, but it is likely to further embolden our adversaries and cause allies to question the depth of America’s resolve.

The Age Of Emboldened Adversaries

On April 11, FBI Director Christopher Wray told the House Appropriations Committee: 

…We’ve seen the threat from foreign terrorists rise to a whole ‘nother level after October 7…Looking back over my career in law enforcement, I’d be hard pressed to think of a time where so many threats to our public safety and national security were so elevated all at once. 

Two days after Wray’s testimony, Iran made its first-ever direct attack on Israel. Iran has joined what some have termed an “unholy alliance” with Russia and China to support Russian President Vladimir Putin’s war against Ukraine and China’s expansionist policies across the globe.

Here at home, the anti-semitic, pro-Hamas protests in US universities are unlike anything we have seen in our country, as students are making explicit pro-terrorist statements and calling for annihilation of Israel and Jews. The situation at the US border grows more alarming as the numbers of unknown entrants, many from countries with terrorist ties, have been on the rise. These events abroad and at home indicate the US has entered a new era of emboldened adversaries.

Reflecting the FBI Director’s statement, voters are recognizing the increasing global threats we face. From a new survey for Winning the Issues (April 27-29, 1000 registered voters), a majority of voters (56%) believes that the US is facing the highest level of terrorist threats to public safety in decades (56-27 believe-do not believe). In terms of the campus protests we are seeing in universities like Columbia and Harvard, some have tried to dismiss their seriousness as comparable to campus protests of the 1960s. But our research shows that voters see the current protests as much more threatening to other students than protest movements of the past (47%), rather than similar to Vietnam War protests (40%).

Since the beginning of the year, we have seen an increase in the percentage of voters believing that America’s adversaries have been emboldened as a result of its standing in the world being weakened (55-19 believe-do not believe in late April, up from 51-25 in February). This belief system is not unique to Republicans who believe this by a very large margin (64-10), with 70% of conservative Republicans believing this. Independents (56-19) and a plurality of Democrats (45-28) also take this view.

This sense of weakened international standing goes back to the Biden administration’s disastrous withdrawal from Afghanistan. The president’s job approval on foreign policy (35-55 approve-disapprove) struggles at the same scale as his overall job approval (38-55) and economic job approval (37-56). Disapproval with his handling of foreign policy is not isolated to Republicans; independents disapprove of his handling of foreign policy by more than 2:1 (26-63).

Events of recent months have demonstrated that the threats from Iran, China, Hamas and Russia are no longer isolated incidents; they are interconnected with global implications. Two-thirds of the electorate (67%) see the wars in Ukraine and Gaza as conflicts with global implications rather than isolated wars (23%), and this view is consistent across party.

In this new era of seeing old adversaries act in unprecedented ways, America must rise to the occasion.

Inflation Fears Flare Again

Last week’s disappointing GDP news and uptick in a key inflation gauge (Personal Consumption Expenditures) have up-ended Wall Street hopes for an imminent rate cut. The news was also a major setback for the White House, which is desperate to put inflation behind them in time for the election. Reflecting what inflation reports have shown, the electorate has picked up on the warning signs of an inflation resurgence.

From our new survey for Winning the Issues (April 27-29), there has been an increase in the percentage saying inflation is getting worse — now at 60% — rather than better (16%) or not changing (21%).

At the end of last year, numbers had improved slightly, with 24% saying inflation is getting better and 53% saying worse. But our current numbers show the highest percentage saying “worse” (60%) since September 2023. The last inflation reports have shown inflation remaining at or above 3% for ten months in a row. With the unexpected uptick in PCE, this has now caused a re-examination of the inflation situation as potentially rebounding.

Some like progressive economist Paul Krugman declared victory months ago, dismissing any remaining concerns about inflation as purely a function of partisanship. Our numbers show that Republicans (82% worse) and independents (61%) are overwhelmingly of the view that inflation is getting worse, but with even a plurality of Democrats (39%) seeing inflation as getting worse instead of better (30%).

With six months to go until the election, the White House has been eager to change voters’ minds about inflation improving thanks to the President’s policies, but our numbers show their views moving in the opposite direction.

Inflation Pops Again

This week’s economic news was not good for the White House. On April 25, the Bureau of Economic Analysis reported the first quarter GDP increased only 1.6% according to their advance estimate. This was below the 2.4% expected estimate by economists surveyed by the WSJ. Additionally, the year over year Personal Consumption Expenditures index rose from 2.5% in February to 2.7% in March, mirroring the increase seen in the CPI as it went from 3.2% in February to 3.5% in March. Now there are concerns that inflation may be rebounding. This scenario means the Federal Reserve is likely to keep rates higher for longer, dashing hopes for rate cuts that Wall Street desperately wants.

As we’ve been writing about for some time, our inflation tracking has clearly shown that this problem has not gone away. The latest report for March (3.5% year over year CPI) now makes ten months in a row that inflation has stayed at or above 3%. Our Presidential Inflation Rate tracking the cumulative rate of price increases since President Biden has
been in office has gone over the 19% mark for the first time (19.4%).

The economic narrative that the Biden campaign has been counting on has experienced a setback in the last couple of months. The tense situation in the Middle East is showing no signs of cooling off, posing other potential challenges on the horizon with gas prices and supply chains. From our tracking of Presidential Inflation Rates at the same point in administrations, gas prices have been a problem for the Biden team even before the October 7 attacks in Israel. The most recent inflation report shows an almost 50% (47.8%) increase in gas prices since the beginning of the Biden presidency.

This week’s news and the ongoing Middle East tension mean more tumultuous times may be ahead for the Biden team and that they may have to readjust their strategy on the issue of the economy.

What’s The Matter With Congress?

Congressional job approval is at historic lows with Gallup’s latest rating at a dismal 15-81 approve- disapprove. A recent survey of Congressional staff by the Congressional Management Foundation revealed significant frustration on Capitol Hill, but also a few bright spots.

1.) The desire for bipartisanship still exists. There was broad agreement among staff respondents that it is necessary for Senators and Representatives to collaborate across party lines to best meet the needs of the nation (97% agreed). About two-thirds (65%) strongly agreed. This agreement was bipartisan, with 98% of Republicans and 96% of Democrats agreeing. There is also agreement that it is necessary for staffers to collaborate across party lines for Congress to function effectively, with 98% agreeing with this statement (67% strongly agreed). Similar to views about Members, this view about staff was shared by Republicans (96% agreed) and Democrats (98% agreed).

Majorities of staff respondents recognized the importance of civility (76% very important) and bipartisanship (56% very important), but satisfaction with the current state of both is non-existent (1% very satisfied with current state of civility; 0% very satisfied with state of bipartisanship).

2.) The culture of Congress is not meeting the desire for bipartisanship and civility. A majority of respondents disagreed that it is easy for Senators and Representatives to build relationships across party lines (42-58 agree-disagree, with only 11% strongly agreeing with this statement.) Pessimism about building relationships was bipartisan, with 54% of Republicans and 58% of Democrats disagreeing.

With 51% agreeing that it is easy for staffers to build relationships across party lines, (51-49), this indicates a somewhat more positive outlook on staff relationships than Member relationships (42-58). However, staff from both sides felt that there were insufficient incentives for bipartisanship, with 73% disagreeing that there are strong incentives for staffers to collaborate across party lines (27-73 agree-disagree overall). Only 20% of Republicans and 33% of Democrats agreed that incentives for bipartisanship existed.

3.) There are some areas of improvement. In terms of improvements in legislative functionality, the study identified the work of the Select Committee on the Modernization of Congress as the source. One example was an improvement in satisfaction with access to high quality, nonpartisan expertise in the legislative branch, going from 12% very satisfied in 2022 to 32% in 2023.

4.) Misplaced incentives were seen as a reason for dysfunction. A Republican chief of staff told CMF: “The whole place is broken and the incentive structures no longer match the proper functions of a democratic republic.” A Democratic staffer echoed those same frustrations: “The political incentives are increasingly divorced from policy. Tribalism and cults of personality value symbolic goods for leaders rather than material outcomes for the people.” The study showed the importance of time and resources devoted to policy (97% found it important that Members have adequate time and resources to understand, consider and deliberate policy and legislation.) But only a third of respondents (32%) were satisfied that the needed time and resources existed.

For advocates who are not content with the status quo in Congress, the study seems to highlight three areas for constructive engagement: improving incentives around policy and less on personality; promoting the building of relationships; and celebrating successes to build momentum for more wins. The study shows there is interest in bipartisan cooperation and getting things done, but the day-to-day fires in Congress perpetuate the culture of dysfunction. As we found in 2016 research for Congressional Institute, people thought that positive things may be happening in Congress, but they didn’t hear about it. An independent voter said in our listening sessions, “We really don’t know what’s going on up there. And I’m sure they’ve passed legislation. I just don’t think we’ve heard about it.” It will take changing the current incentive structure to impact the status quo in the way Congress operates.

Biden’s Inflation Streak Continues

The Bureau of Labor Statistics March 2024 Consumer Price Index was released this morning, and came in at a higher than expected year over year rate of 3.5%. This was the 36th month in a row of a 3% or higher inflation rate starting the month after the American Rescue Plan was signed into law. Today’s report almost guarantees the Federal Reserve will hold off on cutting interest rates longer than Wall Street hoped.

Under President Biden, prices have risen 19.4% since he was inaugurated. Contrasting him with the seven prior presidents at the same point in their presidencies, only Carter (36.9%) had a larger increase. The same is true for food where Biden has seen a 21.1% increase in food prices, surpassed only by Carter (34.9%).

While there have been claims about how much gas prices have come down, in looking at the totality of Biden’s tenure, prices have gone up 47.8%. But in this category, two presidents have come in higher: Obama (113.5%) and Carter (104.6%).

For those that have moved to electric vehicles, the cost of electricity has increased as well.
Since Biden’s inauguration, electricity prices have gone up 29.3%. No matter the type of car or truck you might own, the cost to operate it has increased dramatically.

Finally, a critical contrast is that since Biden’s inauguration, weekly wages have increased 14.2%, meaning that wages trail inflation by 5.2%. At the same point in time for under Trump, weekly wages had increased 9.4%, meaning wages had outpaced inflation by 3.1%.

With only seven months to go before the election, today’s inflation report was not good news for the White House. The data indicates there is more work to be done to put inflation behind us.

Who Is The Candidate Of Change In 2024?

The 2024 presidential race will be a Biden-Trump rematch, but compared to today’s sour political climate, the 2020 election was a very different time for the country. We were still in the throes of COVID. The economy was central to the election, but the country was still trying to defeat the virus as closures continued and a vaccine wasn’t yet available. Combined with the protests during the summer, the stage was set for a more unifying positive candidate. Biden’s positive brand image (52-46 fav-unfav) made it easier for voters who didn’t like Trump (46-52 fav-unfav) to vote for him. Exit polls showed the economy was the strong suit for Trump, while Biden won among voters who prioritized the virus. Disruptive change wasn’t the priority it had been in 2016.

The contours of the 2024 election appear much closer to 2016 than 2020. In 2016, the country and economy were seen as on the wrong track. Both party nominees had high negatives, but Clinton had the attributes of the political old guard. Exit polls showed that the most important candidate quality in a choice of four was can bring needed change (39%) over other presidential attributes like has the right experience (22%), has good judgment (20%) and cares about people like me (15%). Among voters who identified can bring needed change as their most important candidate quality, Trump won decisively 82-14.

With the negative outlook on the country and economy similar to 2016, voters are looking for change again. In our survey for Winning the Issues (February 24-25), we tested a series of candidate attributes and asked voters whether they applied more to Biden or Trump. On the attribute of can bring needed change, neither Biden nor Trump reached 50%, but Trump had a significant lead over Biden on this attribute (48-33).

Among voters who think the country is headed on the wrong track (67% of the electorate), they see Trump as the candidate of change 60-19. Trump voters view their candidate as the change agent by an overwhelming 93-1, with Republicans at a similar margin of 88-4. In contrast, only 65% of Democrats and 70% of Biden voters see their party’s nominee as the change candidate, with about 1 in 4 Democrats (24%) being undecided. Additionally, the numbers for Biden are very weak among a key part of the Democratic coalition — African-Americans — with only 40% identifying Biden as the change candidate (31-40) and 29% that do not know.

Among important swing groups, independents see Trump as the candidate of change by almost 2:1 (45-26), although Trump’s lead does not reach 50%. With independents being a group that Biden won by 13 in 2020, this result should concern the Biden team. Among young women 18-44, who the Biden campaign intends to target with an abortion message, only 31% say Biden is the candidate to bring needed change (39-31, 29% don’t know). The same trend is seen among millennial/Gen Z voters (43-33, 24% don’t know).

These numbers don’t represent vote intention, only perceptions on this attribute. But these results indicate a lukewarm view from the President’s own party about his ability to be the change agent the country needs. Given the second-term legislative mandate he seeks, the Biden campaign team should be alarmed.