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.
Democrats are in full-scale panic after last week’s disastrous debate. Subsequent coverage has focused on the President’s performance, but today we are addressing one of the debate statements about the deficit.
In the debate, President Biden said: “He [Trump] had the largest national debt of any president in a four-your period, number one.” At the Office of Management and Budget’s historical tables page on the White House website, there is a file (table 1.1) that looks at the summary of receipts, outlays, and surpluses or deficits (-) from 1789 through 2029 (estimate). The OMB data shows a different picture. In Trump’s four years, the federal budget added 5.56 trillion dollars to the deficit. In Biden’s first three years, his budgets added 5.84 trillion.
Receipts in Biden’s first three years matched Trump’s four years, and the same comparison was true for spending. While Trump spent over 6 trillion dollars in 2020 to deal with COVID, each of the three prior years were under 4.5 trillion.
The difference between the two has been that Biden has normalized the COVID level of spending. In 2022 and 2023, he spent over 6 trillion, and the OMB estimate for 2024 increases to almost 7 trillion (6.9). In the projected four-year period estimated by OMB, President Biden’s federal budget deficits would reach 7.70 trillion dollars, which would be 2.14 trillion dollars larger than the four-year total for Trump’s presidency.
The latest numbers from the Bureau of Labor Statistics show that inflation has gone up 3.3% compared to this time last year, bringing the cumulative rate of inflation under President Biden since his inauguration – his Presidential Inflation Rate (PIR) – to 20.1%. But how does this compare to weekly wages?
Wages have increased 14.6% since President Biden’s inauguration, an increase but not as much as the rise in prices. Currently, wages trail the PIR by 5.5%.
This means that the purchasing power for the average family has decreased 5.5% since President Biden took office.
Data from the Bureau of Labor Statistics show prices rose 3.3% in May 2024 compared to May 2023, bringing the cumulative rate of price increases since President Biden first took office (the Presidential Inflation Rate) to 20.1%. This is the first time that Biden’s PIR has been greater than 20%.
But how does Biden compare to his predecessors?
The chart below shows the Presidential Inflation rates for Biden and the seven previous presidents at the same point in their terms (May of their fourth year). Only Jimmy Carter has a higher rate of inflation (39.8%) than Biden.
The new numbers from the Bureau of Labor Statistics for May 2024 show that inflation has increased 3.3% compared to this time last year. But the Presidential Inflation Rate (PIR) has crossed the 20% threshold (20.1%).
This means that prices have increased about 20% since President Biden first took office.
Recently, the Winston Group released its latest video analysis, looking at the Biden campaign’s “For You” ad. The analysis confirmed what we have observed in past surveys and analyses: President Biden has a credibility problem, especially when it comes to the economy, and has made many statements that voters do not believe. This is particularly true when it comes to key voter groups like independents.
Voters were shown the ad and rated it second by second on a 1-9 scale, with 1 being much less favorable to Biden, 5 being neutral, and 9 being much more favorable to Biden. At the end of the ad voters overall rated it at a neutral 4.9. Among voters with less than a bachelor’s degree (4.8), bachelor’s degrees (5.1) and postgraduate education (4.8), reaction was similarly muted. Typically a 6.0 is a good positive response, and 5.5 a reasonable response. In this case none came close to either of those levels.
The chart below shows the statements in the order they appeared in the ad. Looking at the first three, which set the tone for the remainder of the ad, none of them were believable, for voters overall or by level of education completion. This was especially true for the statement that the US has the strongest economy in the world (30-58 believe-do not believe among voters overall).
Not all of the statements in the ad were unbelievable. A majority overall and by education level believed that Joe Biden passed the law that lowered prescription drug prices and caps insulin at $35 a month for seniors (62-28 among voters overall; 60-29 among voters with less than a bachelor’s degree, 67-26 among voters with a bachelor’s degree, and 66-27 among voters with a postgraduate education).
Overall 9 out of 10 statements did not have a majority believing it. That was true for those with less than a bachelor’s degree. For those with a bachelor’s degree it was 5 out of 10, and among those with a postgraduate education, it was 4 out of 10. That lack of believability resulted in an ineffective ad.
Surveys show President Biden in deep trouble, but Democrats believe voters are disengaged and they have plenty of time to get their message out. Some are choosing to ignore surveys that show Biden behind, which is similar to Republicans that didn’t believe polls showing anything other than a Red Wave in 2022.
Democrats would be wise to heed the warning signs and take advantage of the time. Inflation is the central problem that haunts the Biden team nationally and in the states, and the White House hasn’t yet found a compelling economic message that voters believe. Our latest look at the presidential ranges shows the President having significant ground to make up. Ranges are based on the Real Clear Politics averages, removing outliers of the highest and lowest poll results for each candidate. This allows us to see the highs and lows for the candidates, and how much room to run each candidate has. As shown in the chart, Biden underperforms Trump nationally and in the Blue Wall States.
What Democrats see as Biden’s Blue Wall is the group of states (MI, PA, WI) that comprised Trump’s 2016 Rust Belt Coalition. Several traditional Democratic voter groups shifted toward Trump from 2012 to 2016, producing the “Rust Belt Surprise.”
Voters that were critical to Trump’s 2016 win were those who said the economy was “not so good.” According to the exit polls in 2012, 23% said economic conditions were excellent/good and 77% said not so good/poor. In 2016, it was 36% excellent/good – 62% not so good/poor. A key group were those voters who said the economy was “not so good.” In the 2012 election, this group made up 45% of the electorate, and Romney should have carried them. Instead, they went for President Obama by a 13-point margin of 42-55. In this election, they made up 41% of the electorate, and Trump carried them by 13 points at 53-40.
The results in the Rust Belt states displayed this shift on an even a larger scale. The largest shift was in Michigan where President Obama had previously won these voters by 18 points. In 2016, Trump won these voters by 26 points, a 44-point swing. It is not simply that he won these voters in this set of states after Romney had lost them; it was the magnitude of the results gained. With inflation being a top voting priority, the possibility is there for this to happen again.
Newt Gingrich cites our inflation numbers in his commentary yesterday:
Winston and Miller rightly make the point that the impact of the economy over an entire presidency is far more useful than tracking one or two months. Viewed over the entire Biden presidency, the economic pain is beginning to resemble the Jimmy Carter years, when people felt everything was out of control.
One of the key areas of concern for the Biden administration heading to the election this fall is inflation. Axios reported yesterday that the White House released a memo on inflation, detailing what it is doing to help address rising costs. “It’s an attempt,” as Axios says, “to tell Americans that the White House is focused on bringing prices down at a time when voters are unhappy with the economy, and hold the president responsible for inflation.”
As we’ve written before, some commentators have tried to dismiss the muted economic outlook as partisan, though data shows it’s not just Republicans who are down on the economy and unhappy with the way Biden has handled it. But are there differences for voters of varying levels of education? Trending data from Winning the Issues going back to the first month of Biden’s presidency (February 2021) allows us to look at this question over time and in the context of other economic events.
In the beginning, voters of all levels of education approved of the way Biden was handling the economy, though voters with a postgraduate education were clearly the most approving (69% approve), compared to those with a bachelor’s degree (56%), or those with at most an associate’s degree or some college experience (51%). At that time, the CPI was 1.7%.
Following that point, however, we can observe a steady decline in the percent saying they approved of the way Biden was handling the economy, especially among those without a bachelor’s degree. Those with a bachelor’s degree remained moderately positive until October of 2021 (48% approve), the first time that less than a majority of this group said they approved of how Biden was doing.
Those with a postgraduate education remained more or less very positive until early 2022. But in July 2022, each group reached their low point of job approval (30% approve among those with less than a bachelor’s degree, 35% among those with a bachelor’s degree, 38% among those with a postgraduate education). The month before, inflation had peaked at 9.1%.
Since then, generally speaking, voters with a postgraduate education have tracked more closely with those who have bachelor’s degrees, and none of the three groups have had more than 50% approve of Biden’s job on the economy since April 2022. In other words, voters’ views of the president on the economy, while still negative, have reached an equilibrium over the last several months. This is in keeping with the CPI. After its peak in June 2022, inflation eased somewhat, reaching 3% in June 2023. But it hasn’t moved much since, marking 11 consecutive months of 3% or more inflation since the apparent moderation last June. Overall, inflation has been at or above 3% for 37 consecutive months.
This week’s new inflation report (3.4%) showed inflation not going in the wrong direction but not getting much better.
2.) Other household items have gone up significantly. Gas has increased over 50% since the beginning of his term (55.5%). Food is up 21.3% and electricity at 28.5%.
3.) The gap between wages and inflation has widened since last month. The cumulative inflation rate (19.9%) versus the cumulative increase in wages (14.1%) is 5.8%, compared to 5.2% in last month’s report.
After the new inflation numbers were released, the White House claimed that there were many inflationary factors in the economy in play when President Biden took office. Yet after the CARES Act was signed on March 27, 2020, inflation was less than 2% for 11 consecutive months, which extended into Biden’s term. In February 2021, it was at 1.7%. After President Biden signed the American Rescue Plan into law in March 2021, inflation jumped from 2.6% to 4.2% in April which started the current 37 month streak of inflation being over 3%.
Some Democratic strategists have advised the President to show more empathy on economic issues, but given the results of these inflation reports, voters are seeking relief from price increases rather than empathy alone.
