Category: Economy

As President Biden is about to leave office, he’s working hard to frame his economic legacy in the most positive light. He has been giving a series of speeches to stake out the “Biden economic legacy,” shedding light on three economic narratives Republicans should prepare for:

1.) The Biden economy is in great shape to hand off to Trump. Any economic difficulties will be blamed on Trump and Republicans. This week, Biden said “Next month, my administration will end, and a new administration will begin. The new administration’s going to inherit a very strong economy…”

His record on job creation has been one he stresses as a key part of his economic legacy: “I had the greatest job creation record of any single president in a single term…over 6 million jobs.”

2.) Inflation was caused by the pandemic, not Biden’s policies. Republicans have no plan to deal with inflation.

Biden: “The previous administration had no plan — no real plan, really — to get us through one of the toughest periods in our nation’s history. I’ve never been a fan of trickle-down economics. It was a hammer that was hammering working people.”

“I know it’s been hard for many Americans to see [economic progress]. And I understand it. They’re just trying to figure out how to put three squares on the table…But I believe [the American Rescue Plan and Inflation Reduction Act] was the right thing to do. Not only to lift America out of an economic crisis caused by a pandemic, but to set America on a stronger course for the future. And we did that.”

With every CPI report, Republicans should expect Democrats to focus on every negative aspect of inflation, and press Republicans about what policies they are offering to deal with the problem.

3.) Republican economic policies are the primary cause of the debt and deficits. As Republicans go into the 2025 tax discussion, Democrats are already laying the groundwork for the case that Republican tax cuts are the cause of the nation’s fiscal crisis:

Richard Neal, Ways and Means: “In the last three decades, Republicans have skyrocketed the deficit with trillions in tax cuts for billionaires and big corporations, always with the same result: the top 1% benefits while nothing trickles down for workers.”

Sheldon Whitehouse, Senate Budget: “In their blind loyalty to their mega-donors, Republicans’ fixation on giant tax cuts for billionaires has created a revenue problem that is driving up our national debt. Even as federal spending fell over the last year relative to the size of the economy, the deficit increased because Republicans have rigged the tax code so that big corporations and the wealthy can avoid paying their fair share.”

As the new Republican majority goes into its most complex legislative effort in several years, Republicans should prepare for the narratives coming against them and be careful not to make the mistakes of the Biden administration.

In an interview on Sunday, President-elect Trump attributed his win to a simple reason: ”Very simple word, groceries… I started using the word – the groceries. When you buy apples, when you buy bacon, when you buy eggs, they would double and triple the price over a short period of time, and I won an election based on that.”

Going into the November election, our presidential inflation showed a cumulative price increase of 20.7% since the beginning of the Biden administration, with food costs up almost 23% (22.8%.)

As some context for his statement, here are some of the economic numbers from the election:

• The condition of the nation’s economy was seen as negative: 31% excellent/good – 68% not so good/poor.
• An overwhelming 75% of the electorate said inflation had posed some level of hardship for them and their families. 22% said inflation had been a severe hardship; 53% said a moderate hardship; while 24% said there had been no hardship.
• Additionally, voters were asked who they trusted more to handle the economy, Trump or Harris; Trump won 53-46.
• In the Winston Group post election survey of 1,250 respondents who voted, economy/inflation was the top issue at 40%, with immigration a distant second at 12%, and abortion right behind at 11%. No other issue was in double digits.
• The challenge that clearly emerged for Biden and Harris was that voters’ view of the economy was much worse than in the last election. In the 2020 exit polls, 49% said the economy was excellent/good, while 50% said not so good/poor. In this election, it dropped to 31-68.

These numbers demonstrate why the Biden White House was never able to overcome the inflation issue, and why the Harris campaign’s inability to articulate policy positions was such a problem.

For more analysis, see our post-election report.

This morning’s new inflation report showed a slight moderation in year-over-year inflation (2.5%) but with core inflation up 3.2% from a year ago. The year-over-year rate is the lowest since March 2021, the month that the American Rescue Plan was passed. But with inflation still well over 2%, this result seems to indicate there might be a smaller rate cut than Wall Street was hoping for, with markets initially dropping after the inflation news. While year-over-year inflation has moderated, prices are still not coming down. The Presidential Inflation Rate — the cumulative rate since the start of the Biden administration — remains over 20% (20.3%). The trend chart below shows the year-over-year rate (the red line) with the cumulative rate (Presidential Inflation Rate) in blue.

With the cumulative rate of inflation still over 20%, this means consumers are still not feeling relief. The cumulative rates of household expenses are still very high: food, 22.1%; gas, 45.8%; electricity, 30.7.%. The Harris campaign has pivoted from trying to sell good economic news as the Biden campaign had done with little success, to focusing on her plan to lower costs.

There is only one more inflation report (October 10) before the election, so the clock is running out on shaping the inflation narrative.