Inflation (Economics)

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      Hard Questions if Biden’s Approval Doesn’t Follow Economy’s Rise

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      This is about the time when many presidents see their standing turn around, including Ronald Reagan and Bill Clinton.President Biden promoting domestic chip manufacturing.Adriana Zehbrauskas for The New York TimesDoesn’t it feel as if everything’s breaking President Biden’s way lately?His chief rival — whom Mr. Biden already beat in 2020 and whom Democrats, in a sense, beat again in the midterms — is facing criminal indictments and yet currently finds himself cruising to the nomination anyway.The economy — which teetered on the edge of recession for two years with inflation rising and real wages declining — seems as if it might be on track for a soft landing, with inflation falling, real wages rising and the stock market recovering.The backlash against “woke” — a topic Republicans seemed most keen on exploiting in the Biden era — appears to have receded significantly, whether because Donald J. Trump has taken up much of the oxygen; conservatives have overreached; or progressives have reined in their excesses and fallen back to defense after conservatives went on offense.It’s probably too soon to expect these recent developments to lift Mr. Biden’s approval ratings, which remain mired in the low 40s. But if these trends persist, many of the explanations for Mr. Biden’s low approval will quickly become less credible. If his numbers don’t start to move over the next several months — with the wind seemingly at his back — it will quickly begin to raise more serious questions about his standing heading into the 2024 election.To this point in his presidency, it has been fairly easy to attribute his low ratings to economic conditions. Yes, unemployment was low and growth remained steady. But inflation surged, real incomes dropped, stocks fell into a bear market, a recession seemed imminent, and voters could see the signs of a struggling economy everywhere, including supply chain shortages and onerous interest rates.It’s fair to question whether economic conditions have actually been as bad as voters say, but it’s also fair to acknowledge these kinds of conditions can yield a pessimistic electorate. Two bouts of inflation that are reminiscent of today’s post-pandemic economy — the postwar economies of 1920 and 1946 — were catastrophic for the party in power, even as unemployment remained low by the standards of the era.Historically, it can feel as if almost every major political upheaval comes with inflation, whether it’s the Great Unrest in Britain, the Red Summer in the U.S. or even the hyperinflation of Weimar Germany. If high bread prices can be argued to have helped cause the French Revolution, it’s easy to accept that 9 percent inflation (at its peak in June 2022) could hurt Mr. Biden’s approval ratings by five or 10 percentage points.But if inflation has been what’s holding Mr. Biden back, it’s hard to say it should hold him back for too much longer. Annual inflation fell to 3 percent last month, and real incomes have finally started to rise. The stock market — one of the most visible and consequential measures of the economy for millions of Americans — has increased around 15 percent over the last six months. The University of Michigan consumer sentiment index surged 13 percent in July, reaching the highest level since September 2021 — the first full month Mr. Biden’s approval ratings were beneath 50 percent.There’s another factor that ought to help Mr. Biden’s approval rating: the onset of a new phase of the Republican primary campaign, including debates. As the Republican candidates become more prominent in American life, voters may start judging Mr. Biden against the alternatives, not just in isolation. Some of the Democratic-leaning voters who currently disapprove of Mr. Biden might begin to look at the Biden presidency in a different light.Perhaps in part for these reasons, this is about the time when many presidents see their standing turn around. Ronald Reagan and Bill Clinton’s approval ratings were clearly on the upswing at this stage of the election cycle — though both were still beneath 50 percent — as voters began to see and feel an improving economy.We will see in the months ahead whether Mr. Biden’s ratings begin to increase. I wouldn’t expect it to happen quickly: Mr. Reagan and Mr. Clinton’s ratings increased by less than a point per month between roughly this time and their re-election. Barack Obama’s ratings increased at a similar, if slightly slower, pace from his post-debt-ceiling-crisis nadir a little later in the year.But even if it is not quick, I would expect Mr. Biden’s ratings to begin to increase if these conditions remain in place. Today’s era may be polarized, but there are plenty of persuadable and even Democratic-leaning voters — who disapprove of his performance — available to return to his side.If the economy keeps improving and yet his ratings remain stagnant in the months ahead, it will gradually begin to raise hard questions about the real source of his weakness — including the possibility that his age, by feeding the perception of a feeble president, prevents voters from seeing him as effective, whatever his actual record. More

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      British By-elections: What to Know

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      Three seats in Parliament recently occupied by Conservatives are up for grabs in an election that may show which way the political winds are blowing.One of the last things Britain’s prime minister, Rishi Sunak, needs right now, while he’s trailing in the opinion polls as the economy stalls, is a test of his electoral popularity.But on Thursday, he faces three contests, as voters in different parts of England select replacements for a trio of lawmakers from his Conservative Party who have quit Parliament, including former Prime Minister Boris Johnson.The votes, known as by-elections, happen when a seat in the House of Commons becomes vacant between general elections. In the British system, every elected lawmaker represents a district, so when they quit, those voters decide who will succeed them.Hanging over the contests is the poisoned legacy of Mr. Johnson, who angrily quit Parliament after lawmakers ruled that he had lied to them about Covid-lockdown-breaking parties in Downing Street.Because the government will not change whatever the outcome, voters often use such by-elections to register unhappiness with their political leaders. And with inflation and interest rates high, labor unrest boiling and the health service struggling, Mr. Sunak’s Conservatives are braced for the possibility of losing all three contests.That would make Mr. Sunak the first prime minister to suffer a triple by-election defeat in one day since 1968. It would also stoke fears among Conservatives that, under his leadership, they are heading for defeat in a general election expected next year.But by-elections are unpredictable, so nothing is certain on this so-called super Thursday. And so low are expectations for the Conservatives that even winning one would be a welcome relief for Mr. Sunak.Here’s where voters are casting ballots:Uxbridge and South RuislipThis is the seat vacated by Mr. Johnson, and it lies on the fringes of London, the capital. Although the inner areas of the capital tilt to Labour, the main opposition party, outer London, with its suburbs and larger homes, is much better territory for the Conservatives. Mr. Johnson’s majority in the last general election was relatively modest at 7,210 votes, and the scandal-hit former prime minister is a divisive figure, so Labour hopes to win here.But the Conservatives see an opening in a plan to expand an ultralow-emissions program to areas including Uxbridge and South Ruislip. The expansion, pressed by London’s Labour mayor, Sadiq Khan, would cost those driving older, more polluting cars. Conservatives are campaigning against the expansion. The Labour candidate for the area has also said he is against the expansion, though Labour’s leader has not taken a stand.Parliamentary candidates onstage ahead of the by-election for the seat previously held by former Prime Minister Boris Johnson in Uxbridge this month.Susannah Ireland/ReutersSelby and AinstyThe contest in Selby and Ainsty, in Yorkshire in the north of England, is another aftershock of recent political turbulence because the lawmaker who quit, Nigel Adams, was a close ally of Mr. Johnson’s. He resigned after not being awarded a seat in the House of Lords, as he had expected. This is a scenic part of northern England but also one with a mining history, and Labour will be hoping it can snatch the seat.That would send a powerful signal that the party is returning to popularity in the north and middle of England — areas it once dominated but where it lost out in the 2019 general election. Yet, it’s a tall order. If Labour can succeed in Selby and Ainsty, where the Conservative majority in 2019 was 20,137, that would set a record for the size of a majority overturned by Labour in a by-election. So victory for Labour here would suggest it is well on course for a general election victory.Somerton and FromeInstead of Labour, the smaller, centrist Liberal Democrats are seen as the main challengers to the Conservatives in Somerton and Frome, in the southwest of England.The vote follows the resignation of David Warburton, who quit after admitting that he had consumed cocaine. The Lib-Dems have a strong tradition of success in this attractive, mainly rural part of the country, and they held this electoral district until 2015.In the last election, the Conservatives won a big majority, 19,213. But since then, the they have suffered losses in some of their heartland areas in the south of England, the so-called blue wall, named after the party’s campaign colors.At the same time, the fortunes of the Liberal Democrats have been revived considerably. This year, they performed well in elections in local municipalities, and last year, they stormed to victory in a by-election in Tiverton and Honiton, also in the southwest. More

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      As Sunak Makes His Case to Britons, the Economy Could Undermine It

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      Britain’s Conservative government faces a morass of problems, some new, others longstanding, that are stymying Prime Minister Rishi Sunak.Prime Minister Rishi Sunak hopes to hold onto power by selling himself as the repairman for a broken Britain. On Wednesday, he got a faint sign that the repair work was gaining traction: the government announced that Britain’s inflation rate in June was 7.9 percent, a decline from the previous month.But the rate is still higher than that of Britain’s European neighbors and more than twice that of the United States. And it is just one of a morass of economic problems — from spiraling debt to labor shortages to sputtering growth — that are stymying Mr. Sunak as he makes the case that his Conservative Party, in government for the past 13 years, deserves to stay there after an election that he must call by January 2025.The Conservatives will face an early test of their political fortunes on Thursday, with three by-elections, special elections to fill seats in Parliament vacated by Tory lawmakers. The party is girding itself for a long day.“They’re running out of runway,” said Tim Bale, a professor of politics at Queen Mary University of London. “These by-elections are likely to be a referendum on the government, and they could lose all three.”Shoppers in London last month. Britain’s annual inflation rate is higher than that of its European neighbors and twice that of United States.Tolga Akmen/EPA, via ShutterstockMr. Sunak, a former chancellor of the Exchequer who once worked at Goldman Sachs, has cultivated a reputation as a technocrat and problem solver. He has thrown off the supply-side ideological experimentation of his predecessor, Liz Truss, and the have-your-cake-and-eat-it style of her predecessor, Boris Johnson.But Mr. Sunak’s return to fiscal prudence has yet to reinvigorate Britain’s growth. On the contrary, inflation is forcing the Bank of England to hike interest rates aggressively to avert a wage-price spiral. The tight-money policy threatens to tip the economy, already stagnant, into recession. And it is inflicting pain on millions of Britons who face soaring rents and higher rates on their mortgages.Inflation, economists agree, is likely to continue to drop in the next six months, perhaps even enough to meet Mr. Sunak’s goal of halving the rate to 5.2 percent by year-end. But Britain’s other problems — anemic growth, low productivity, a labor shortage, and a crumbling National Health Service — are not likely to be fixed in time for him to claim a full turnaround before he faces the voters.“Low productivity and low growth make economic policy challenging,” said Mahmood Pradhan, head of global macro economics at Amundi, an asset manager. “It reduces fiscal space. It’s a very tight straitjacket to be in.”With deteriorating public finances, Mr. Sunak can neither spend heavily to raise wages for striking doctors or railway workers, nor can he offer tax cuts to voters. As things stand, he is already at risk of missing another of his five pledges: to reduce national debt. Government debt has risen to more 100 percent of gross domestic product for the first time since 1961, according to the latest data.Striking junior doctors outside Queens Hospital in Rumford in March.Andrew Testa for The New York TimesFor two years, the government has frozen the income brackets for personal income taxes rather than raising them with inflation, driving up the effective rates. As a result, Mr. Sunak finds himself in an awkward paradox: a free-market Conservative heading into an election with a government that is imposing the greatest tax burden on the electorate since World War II.Critics argue he has no one to blame but himself. Mr. Sunak supported the fiscal austerity of the Conservative-led government of David Cameron and his chancellor, George Osborne, which hurt Britain’s productivity and hollowed out its public services. And he championed Brexit, which cut into its trade with the European Union, scared off investment and worsened its labor shortage.“He’s quite rare in being directly associated with both Cameron-Osborne austerity and Johnsonian hard Brexit,” said Jonathan Portes, a professor of economics and public policy at Kings College London. “Many other senior Tories could plausibly claim that they didn’t really buy into one or the other. Not Sunak.”This week’s by-elections attest to Mr. Sunak’s predicament. One seat belonged to Mr. Johnson, who resigned from Parliament after a committee recommended suspending him for misleading lawmakers about his attendance at parties during the coronavirus pandemic lockdowns. Another was held by an ally of Mr. Johnson, who also quit, and the third by a lawmaker who resigned after allegations of drug use and sexual misconduct.While Mr. Johnson’s soiled legacy and Conservative Party scandals will play a role in these races, analysts say the cost-of-living crisis will be the dominant theme. Few governments, Professor Bale noted, win elections when real wages are eroding, as they are in Britain. In the latest polls, the opposition Labour Party leads the Conservatives by close to 20 percentage points.The specter of a sweeping defeat has put Mr. Sunak under pressure from Tory backbenchers to offer voters relief in the form of tax cuts or help in paying their mortgages. The most analysts expect, however, is for him to promise a reduction in income taxes next spring, to be deferred until after the election.As Mr. Sunak likes to remind people, not all of Britain’s problems are unique or self-inflicted. Like many other countries, it suffered from supply bottlenecks after pandemic lockdowns ended, from rising food prices and from the lingering impact of soaring energy prices after Russia invaded Ukraine.Yet Britain’s core inflation rate — which excludes volatile energy and food prices and is a gauge for domestic price pressures — has remained high at 6.9 percent, compared to 4.8 percent in the United States and 5.4 percent in the eurozone.“That does suggest these inflation dynamics have become more embedded than they have in other countries,” said Kristin Forbes, a professor of management and global economics at the Massachusetts Institute of Technology, and a former member of the Bank of England’s rate-setting committee.Britain, she said, had the misfortune of being hit by both the energy spike, like its neighbors in Europe, and strong domestic inflationary pressures because of a tight labor market, like the United States.Commuters cross London Bridge last week. Unlike most countries, Britain still has more people out of the labor force than before the pandemic.Andy Rain/EPA, via Shutterstock“The U.K. was facing a more difficult challenge than the other countries, in the sense it was really hit by a confluence of shocks that were greater than the individual shocks hitting other countries,” Professor Forbes said.But there are other problems that are distinctively British. Unlike most countries, Britain still has more people out of the labor force than before the pandemic. A majority say they can’t work because of long-term illnesses, a problem exacerbated by the crisis in the N.H.S. With so many job vacancies, wages are rising rapidly, which further fuels inflation.Mr. Sunak has offered to increase public sector wages by 5 percent to 7 percent to end strikes that have closed Britain’s schools and crippled the health service. But that has yet to quell the labor unrest.Britain has so far avoided a recession, surprising some economists. But its resilience could crack, as people curtail spending to pay their rising mortgage bills. Already, about 4.5 million households have had to swallow rate increases since the Bank of England started raising interest rates in December 2021. The rest, another 4 million, will be affected by higher rates by the end of 2026.As with other Western leaders, Mr. Sunak’s fortunes may be largely out of his hands. Last month, the Bank of England, stung by the virulence of inflation, unexpectedly raised interest rates by half a percent, to 5 percent. Traders are betting that rates will climb further still, to about 5.8 percent by the end of the year — implying several more rate increases that would mean higher financing costs for businesses and households and hurt economic growth even more.“The more tightening we see, the risk of recession rises,” said Mr. Pradhan, who served as a deputy director of the International Monetary Fund. “It wouldn’t take very much to tip the U.K. economy into recession.” More

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      Biden Pledges Long-Term Backing for Ukraine, but a U.S. Election Looms

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      Citing American politics, some NATO leaders expressed concern that Washington could waver in its support if there were a shift in power.Moments after President Biden assured Volodymyr Zelensky that he could count on United States support for as long as it took, the Ukrainian leader used the opportunity to speak not only to NATO allies but also to an audience thousands of miles away.“I understand that it’s all your money,” Mr. Zelensky said, addressing Americans directly. “You spend this money for our lives.”Despite Mr. Biden’s repeated promises of staying by Ukraine’s side in its war against Russia, questions about the shelf life of support among American people and lawmakers hung over the summit of Western allies. Even as the U.S. president was giving a long-term commitment, a group of far-right Republican lawmakers in Washington was pushing legislation that would scale back aid to Ukraine, exposing fractures in the Republican Party and raising doubts about its commitment should it capture the White House next year.The two G.O.P. candidates leading in polls, Donald J. Trump and Ron DeSantis, have also expressed reservations about maintaining the war as a priority for the United States, fueling concern among some Western allies and injecting the American electoral cycle as a major element in Ukraine’s prospects for victory.At the NATO summit, Mr. Biden was intent on addressing those doubts, vowing to continue to rally the alliance in support of Ukraine and speaking to his domestic audience back home, preparing Americans for a prolonged standoff with Russia. During a speech from Vilnius University, in the Lithuanian capital, he compared the plight of Ukraine to the Cold War struggle for freedom in Europe, a fight that had the overwhelming support of both the Democratic and Republican Parties.“We will not waver,” Mr. Biden said, a message echoed by most NATO leaders. “I mean that. Our commitment to Ukraine will not weaken.”Still, some leaders openly questioned just how long Kyiv could count on robust U.S. support.Ukraine needed to make military progress more or less “by the end of this year” because of the coming elections in the United States, President Petr Pavel of the Czech Republic warned on the first day of the summit. By next year, he suggested, there could also be “another decline of willingness to massively support Ukraine with more weapons.”The president of the Czech Republic, Petr Pavel, at the NATO summit on Tuesday. Ukraine needed to make military progress more or less “by the end of this year,” he said.Sean Gallup/Getty ImagesBen Wallace, Britain’s defense minister, went so far as “providing a slight word of caution” that Ukraine should express more appreciation to allies for sending tens of billions of dollars in aid to Kyiv.“Sometimes you’ve got to persuade lawmakers on the Hill in America,” Mr. Wallace said. “You’ve got to persuade doubting politicians in other countries that, you know, that it’s worthwhile.”(In a stern reply to Mr. Wallace, Mr. Zelensky later told reporters, “He can write to me about how he wants to be thanked.”)Even as President Recep Tayyip Erdogan of Turkey expressed optimism about collaborating with the United States at future NATO summits, he joked about the uncertainty of future U.S. leadership. “With the forthcoming elections, I would also like to take this opportunity to wish you the best of luck,” Mr. Erdogan told Mr. Biden, prompting the American president to laugh and reassure him that he would be meeting him again in the years ahead.But the concerns expressed by those leaders appeared to have some grounding, given Republican skepticism.“I’m of course concerned about the leadership,” said William Taylor, a former ambassador to Ukraine in the Bush and Obama administrations. “American leadership on this issue is going to be key, and it will have to continue to be bipartisan.”Mr. Biden’s aides say they believe his ability to build support for Ukraine both domestically and overseas will be one of the lasting achievements of his presidency. He has sold himself as someone who can repair the divisions deepened by his rivals, and on the campaign trail he is expected to emphasize his consensus-building in the halls of Congress and on the global stage during what he has described as an inflection point for the world.Turkey’s decision to end a block on Sweden’s entrance to NATO and Mr. Zelensky’s declaration that the summit had given Ukraine a “significant security victory” will probably help Mr. Biden’s case. But many American voters remain unconvinced, particularly about his economic record, fueling his low approval numbers.Over the past year, Mr. Biden has attempted to frame the economic hardship that comes with aiding Ukraine as a cost of defending democracy.But some support among the public has wavered at times as Americans faced soaring consumer prices and Europeans grappled with an energy crisis after cutting their reliance on Russian gas.The Consumer Price Index reported on Wednesday that U.S. inflation had cooled slightly in June, providing an assist to Mr. Biden’s pitch. Federal Reserve officials are still assessing, however, just how long the trend will last. Consumer price rises remain above the rate of increase from before the pandemic.A recent Reuters-Ipsos survey found a sharp rise in support among the American public for helping Ukraine’s effort to defend itself against Russia. The survey found that 81 percent of Democrats, 56 percent of Republicans and 57 percent of independents favored supplying U.S. weapons to Ukraine. The poll also found that a large majority of Americans were more likely to support a presidential candidate who would continue to provide military aid to Kyiv.“This is a good debate to have,” Mr. Taylor, the former ambassador, said. “The American people deserve to participate in the debate about the support for Ukraine and the opposition to Russia’s invasion.”Mr. Taylor said he remained optimistic about Ukraine funding, since both the Democratic and Republican leadership in Congress have expressed support and because the proposals by the far-right flank are almost certain not to pass the House.Throughout the week, Mr. Biden and other American officials have been intent on just ensuring unity in backing for Ukraine — at the NATO summit and back home. When a Ukrainian activist pressed Jake Sullivan, Mr. Biden’s national security adviser, over the U.S. administration’s reluctance to invite Ukraine to join the alliance immediately, Mr. Sullivan reminded her that the Biden administration had provided “an enormous amount of capacity” to Kyiv.He then invoked those within U.S. borders. “The American people have sought — in watching and wanting to stand in solidarity with the brave and courageous people of Ukraine — to step up and deliver, and I think the American people do deserve a degree of gratitude from us,” he said.And in describing the war as a choice between democracy and autocratic governments — a message he has leaned on since the start of his presidency — Mr. Biden sought to convince voters that they should care about a battle on the other side of the globe.“A choice between a world defined by coercion and exploitation, where might makes right,” Mr. Biden said, “or a world where we recognize that our own success is bound to the success of others.” More

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      Can Biden Change the Economic Narrative?

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      Back in the 1970s, Arthur Okun, an economist who had been a policy adviser to Lyndon Johnson, suggested a quick-and-dirty way to assess the nation’s economic condition: the “misery index,” the sum of inflation and unemployment. It was and is a crude, easily criticized measure. The measurable economic harm from unemployment, for instance, is much higher than that from inflation. Yet the index has historically done a quite good job of predicting overall economic sentiment.So it seems worth noting that the misery index — which soared along with inflation during 2021 and the first half of 2022 — has plunged over the past year. It is now all the way back to its level when President Biden took office.This remarkable turnaround raises several questions. First, is it real? (Yes.) Second, will ordinary Americans notice? (They already have.) Third, will they give Biden credit? (That’s a lot less clear.)The plunge in the misery index reflects both what didn’t happen and what did. What didn’t happen, despite a drumbeat of dire warnings in the news media, was a recession. The U.S. economy added four million jobs over the past year, and the unemployment rate has remained near a 50-year low.What did happen was a rapid decline in inflation. But is this decline sustainable? You may have seen news reports pointing out that “core” inflation, which excludes volatile food and energy prices, has been “sticky,” suggesting that improvement on the inflation front will be only a temporary phenomenon.But just about every economist paying attention to the data knows that the traditional measure of core inflation has gone rotten, because it’s being driven largely by the delayed effects of a surge in rents that ended in mid-2022. This surge, by the way, was probably caused by the rise in remote work triggered by the Covid-19 pandemic rather than by any Biden administration policy.Alternative measures of core inflation that exclude shelter by and large show a clear pattern of disinflation; inflation is still running higher than it was before the pandemic, but it has come down a lot. If you really work at it, it’s still possible to be pessimistic about the inflation outlook, but it’s getting harder and harder. The good news about inflation, and about the economy as a whole, does look real.But are people noticing this improvement? Traditional measures of economic sentiment have become problematic in recent years: Ask people how the economy is doing, and their response is strongly affected both by partisanship and, I believe, by the narratives conveyed by the news media. That is, what people say about the economy is, all too often, what they think they’re supposed to say.But if you ask Americans more specific questions, such as whether now is a good time to find a quality job, they typically say yes. At the same time, their expectations about future inflation have declined substantially.And if you look at a novel indicator — what information people are searching for on the internet — you’ll find that searches for both “inflation” and “recession” soared in 2021-22 along with the misery index but have plunged over the past year.Finally, as always, it’s important to look at what people do as well as what they say. Strong consumer spending, record levels of air travel and many other indicators suggest that Americans are feeling pretty good about their economic circumstances.But will Biden get credit? Polls suggest that voters are still giving him very poor marks for his handling of the economy, despite the decline in the misery index.Some analysts have argued that this jaundiced view reflects a failure of wages to keep up with inflation. But this was true for most of the Reagan years too, and in any case real wages have been rising lately.So will voters’ views of the Biden economy eventually reflect the good news? Or did the inflation shock of 2021-22 establish a narrative of Biden as a poor economic manager that has become too deeply entrenched — both in the public consciousness and in the news media — to be dislodged even as the economy rapidly improves?Biden himself is trying hard to change that narrative, by pointing both to the improving data and to an impressive surge in manufacturing investment. But I have no idea whether he’ll succeed. One encouraging precedent for Biden: Ronald Reagan still had fairly low approval in mid-1983, then went on to win a landslide in 1984 on the strength of the economy’s recovery. Biden might yet turn the narrative on his economic policy around.And even if he can’t, it might not matter. High inflation was supposed to guarantee a huge red wave in the midterm elections. Instead, Democrats did surprisingly well, probably because abortion and other social issues played a bigger role than economics. Those social issues aren’t going away, while high inflation is. Arguably, Biden doesn’t need to convince Americans that his economic policies have been highly successful; he just needs to make the case that the economy isn’t doing too badly.And it isn’t. In fact, by most measures the economy is doing quite well.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More

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      Biden Is Trying to Co-opt Trump’s Biggest Strength

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      Joe Biden just offered a window into what a Biden-Trump rematch might look like. Well, part of it, at least.The wildness of Donald Trump’s political style often obscures — at least to his critics — the more banal dimensions of his appeal. The strongest of Trump’s arguments, and the one Biden has the most to fear from in 2024, is economic. In 2016, Trump ran as a businessman savant who would wield his mastery of the deal in service of the American people. “My whole life I’ve been greedy, greedy, greedy,” Trump said. “I’ve grabbed all the money I could get. I’m so greedy. But now I want to be greedy for the United States.”Trump said that elites had sold you out. They traded your job to China. They let your bridges and roads and buildings crumble. They respected the work they did — work that happens behind a computer screen, work that needs fancy degrees, work that happens in offices rather than factories and cities rather than towns — and dismissed the work you did. They got rich and you got nothing. Exit polls found that Trump won large majorities among those who thought the economy was “fair” or “poor.”Trump did not, during his presidency, turn that critique into an agenda. There were islands of action — trade policy foremost among them — but the order of the day was incoherence. Infrastructure weeks came and went. Tax cuts were tilted toward the rich. There was no strategy to restore America’s manufacturing prowess or rebuild bargaining power for workers without college degrees.But Trump had the good fortune to take office during an economic boom. And he kept that boom going. He worked with congressional Republicans to tax less and spend more, budget deficits be damned. He appointed Jay Powell to the Federal Reserve, and Powell kept money cheap and the labor market hot. Unemployment, in February 2020, was 3.5 percent. Wages were rising and inflation was low.Then Covid hit, and Trump worked with Speaker Nancy Pelosi to flood the economy with trillions of dollars in support payments. Joblessness spiked, but workers overall didn’t suffer. This is Trump’s deepest well of strength in a 2024 rematch. Only about a third of voters approve of the job Biden has done on the economy. Polls show Trump is the more trusted economic manager, by far.On Wednesday, in Chicago, Biden previewed the counterargument he’ll make in a much-hyped speech defining “Bidenomics.” Biden’s case is this: What Trump only promised, I delivered.Biden set his economic policies in contrast to “40 years of trickle-down.” Trickle-down economics usually describes the theory that tax cuts at the top will lead to prosperity at the bottom. Biden is using it to describe a more expansive economic order — what sometimes gets called “neoliberalism.” Trickle-down, in his telling, was the philosophy that “it didn’t matter where you made things.” It “meant slashing public investment” and looking the other way as “three-quarters of U.S. industries grew more concentrated.” Forty years, as alert readers will note, encompasses not just the administrations of Donald Trump and George W. Bush and George H.W. Bush and Ronald Reagan, but Bill Clinton and, yes, Barack Obama.This is a point worth dwelling on. The Biden administration is thickly populated with veterans of the Obama and Clinton White Houses. But it doesn’t see itself in comfortable continuity with those legacies. It sees itself, in key ways, as a break with them.Back in May, Jake Sullivan, Biden’s national security adviser (and a key aide, before that, to both Hillary Clinton and Barack Obama), made this explicit during a speech to the Brookings Institution. Sullivan slammed the belief that “the type of growth did not matter.” That had led, he said, to administrations that let Wall Street thrive while “essential sectors, like semiconductors and infrastructure, atrophied.” He dismissed the “assumption at the heart of all of this policy: that markets always allocate capital productively and efficiently.”And he tendered a modest mea culpa for his own party. “Frankly, our domestic economic policies also failed to fully account for the consequences of our international economic policies,” he said. In letting globalization and automation hollow out domestic manufacturing, Democrats had been part of a Washington consensus that “had frayed the socioeconomic foundations on which any strong and resilient democracy rests.”Biden’s speech in Chicago tried to show he was a Democrat who had learned these lessons. First, there was his emphasis on place. “I believe every American willing to work hard should be able to say where they grew up and stay where they grew up,” he said. “That’s Bidenomics.” Later, he said it again. “I believe that every American willing to work hard should be able to get a job no matter where they are — in the heartland, in small towns, in every part of this country — to raise their kids on a good paycheck and keep their roots where they grew up.”I talked to Jared Bernstein, the chairman of Biden’s Council of Economic Advisers, about the thinking here. “One of the pretty bereft assumptions of traditional economics is that you don’t need to worry about place because, as long as there are good jobs somewhere, people will go there and get them,” Bernstein told me. “It doesn’t really work that way.” One reason it doesn’t work that way is housing costs. “The idea that you can relocate from rural America, where housing is cheap, to expensive-housing America, even with the pay differentials, is a bit of a fantasy,” he said.Biden’s answer is built around the investments being made by the Inflation Reduction Act and the bipartisan infrastructure bill. You don’t install wind and solar farms in Manhattan and San Francisco. You don’t even necessarily do it in blue states, much to the chagrin of Democratic governors. Biden pointed to Weirton, W.Va., “where a steel mill closed in the beginning of the century” and, because of him, an iron-air battery plant is “being built on the same exact site, bringing back 750 good-paying jobs, bringing back a sense of pride and hope for the future.” The Rocky Mountain Institute, a clean energy research firm, estimates that Biden’s red states will get $623 billion in clean energy investments by 2030, compared with $354 billion for blue states.All these factories and battery plants and electric-vehicle charging stations and auto manufacturing facilities give Biden his strongest line against Trump. After comparing the infrastructure weeks Trump never delivered and “the infrastructure decade” he did, Biden noted: “Construction of manufacturing facilities here on U.S. soil grew only 2 percent on my predecessor’s watch in four years. Two percent. On my watch, it’s grown nearly 100 percent in two years.”Biden made a point of saying that in the economy he’s building, “we don’t need everyone to have a four-year degree. It’s great if you can get one; we’re trying to make it easier for you to get one. But you don’t need it to get a good-paying job anymore.”Bernstein didn’t pull his punch on this one. “I’ve been part of Democratic administrations where, basically, the solution to labor market woes was to go to college. The president has seen through that.” Biden, he continued, “realizes something everybody should know. About two-thirds of the work force isn’t college-educated. And there’s no version of Bidenomics that leaves two-thirds of the labor force out.”But here, Biden’s policy argument was a little thinner. He talked up his support for unions and apprenticeship programs, but he named more proposals to help people go to college than to help them get good jobs without a degree.The best thing Biden has done for less-educated workers is preside over a tight labor market. Unemployment has been below 4 percent since February 2022, and workers who are often on the margin are making gains. The Black-white employment gap has nearly closed, and wage gains have been particularly strong for workers without a college education. But the Biden administration’s pride in those numbers only underscores the real problem it faces: Americans felt good about the economy under Trump. They don’t feel good about it under Biden.The reason is simple: Real wages have been falling because inflation has been rising. Biden’s long-term investments, his efforts to rebuild American manufacturing and create millions of news jobs decarbonizing the American economy, will take time to pay off. People have to live in the economy now, not a decade from now.The good news — for both Biden and America — is that real wages have risen over the past few months. Inflation is down by more than half since its peak. Forecasters who were confidently predicting a recession in 2023 are now hedging. Mark Zandi, of Moody’s Analytics, thinks we’ll escape the downturn altogether. Whether the good economic news continues may well decide the 2024 election. Biden has co-opted the best of Trump’s ideas and pursued them with a diligence and focus that Trump never did. But that won’t mean much if voters still find themselves yearning for Trump’s economy.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More

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      Biden Isn’t Getting the Credit for the Economy He Deserves

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      The misery index is a crude but effective way to measure the health of the economy. You add up the inflation rate and the unemployment rate. If you’re a president running for re-election, you want that number to be as low as possible.When Ronald Reagan won re-election, it was about 11.4, when George W. Bush did so it was 9, for Barack Obama it was 9.5, and today, as Joe Biden runs for re-election, it’s only 7.7.Biden should be cruising to an easy re-election victory. And that misery index number doesn’t even begin to capture the strength of the American economy at the moment. There are a zillion positive indicators right now, as the folks in the administration will be quick to tell you. The economy has created 13 million jobs since Biden’s Inauguration Day. According to the Conference Board, a business research firm, Americans’ job satisfaction is at its highest level in 36 years. Household net worth is surging.We learned Thursday that the U.S. economy grew at an annualized 2 percent rate in the first quarter of this year, well above the economists’ expectations of around 1.4 percent. The best part of it is that the new prosperity is helping those who have long been left behind. In the four years of Donald Trump’s administration, spending on manufacturing facilities grew by 5 percent. During the first two years of Biden’s administration, such investment more than doubled and about 800,000 manufacturing jobs were created.This is not just coincidence. It’s a direct outcome of Biden policies: the Inflation Reduction Act, with its green technology provisions, the infrastructure bill, the CHIPS Act.Biden’s stimulative spending did boost the inflation rate, but inflation is now lower than in many other developed nations and our economy is stronger.So Americans should be celebrating. But they are not. According to an NBC News survey conducted this month, at least 74 percent of Americans say the country is on the wrong track. The Gallup economic confidence index over the past year has been starkly negative; people haven’t felt this bad about the economy since the throes of the global financial crisis in 2008 and 2009. The University of Michigan’s Consumer Sentiment Index is also tremendously downbeat. Joe Biden’s approval numbers have been stuck around a perilously low 43 percent for a year.As the maestro political analyst Charlie Cook noted in 2020, on average, presidents tend to lose their re-election bids when about 70 percent of Americans think the country is on the wrong track, and they tend to win when fewer than half of Americans think that.Why are Americans feeling so bad about an economy that’s so good? Partly, it’s inflation. Things have stabilized recently as inflation has dropped, but for a while there, real wages really were falling. Prices on things like gas and food are now significantly higher than they were three years ago.The Biden folks are hoping that as inflation continues to decline and as they get the word out, Americans will begin to feel better about things. But it’s not that simple.Part of it is the media. A recent study found that over the past couple of decades headlines have grown starkly more negative, conveying anger and fear. That’s bound to spread bad vibes through the populace.But the main problem is national psychology. Americans’ satisfaction with their personal lives is nearly four times as high as their satisfaction with the state of the nation. That’s likely because during the Trump era we have suffered a collective moral injury, a collective loss of confidence, a loss of faith in ourselves as a nation.America has suffered two recent periods of national demoralization. In the 1970s, during Vietnam and Watergate, Americans lost faith in their institutions. During the Trump era, Americans also lost faith in one another. Those who supported Trump were converted to the gospel of American Carnage, the idea that elite Americans seek to destroy other Americans, that we are on the precipice of disaster. Those who opposed Trump were appalled that their countrymen could support him, disgusted by his rampant immorality, alarmed that their democracy was suddenly in peril.The anthropologist Raoul Naroll argued that every society has a “moral net,” a cultural infrastructure that exists, mostly unconsciously, in the minds of its members. America’s is in tatters. This manifests a loss of national self-esteem. People begin to assume national incompetence. Fearful and anxiety-ridden people are quick to perceive the negative aspects of any situation, hypersensitive to threat, prone to pessimism.You can’t argue people out of that psychological and moral state with statistics and fact sheets. Biden is going to have to serve as a national guide, not just an administrator. He has to get outside the protective walls that have been built around him and make himself the center of the nation’s attention, not Trump. He’ll have to come up with a 21st-century national story that gives people a sense of coherence and belonging — that we are marching in a clear direction toward some concrete set of goals.Good jobs numbers alone don’t heal a brutalized national psyche, and that’s our main problem right now.The Times is committed to publishing a diversity of letters to the editor. We’d like to hear what you think about this or any of our articles. Here are some tips. And here’s our email: letters@nytimes.com.Follow The New York Times Opinion section on Facebook, Twitter (@NYTopinion) and Instagram. More

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      Biden to Deliver Major Address on the Economy in Chicago

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      President Biden hopes to claim credit for what the White House describes as a record-breaking economic revival in America.President Biden’s attempt to earn a second term in the White House begins with a concerted campaign to claim credit for what he describes as a record-breaking economic revival in America.Mr. Biden will make that case in what his aides say is a “cornerstone” speech on Wednesday, using the backdrop of the Old Chicago Main Post Office to reassert the lasting benefits of “Bidenomics” as the 2024 campaign cycle heats up.He will argue that his willingness to plunge the American government more directly into supporting key industries like silicon chips has revitalized manufacturing. He will say investments in rebuilding crumbling infrastructure will pave the way for future growth. And he will insist that spending hundreds of millions of dollars on programs like student debt relief will let more people find their way to a comfortable, middle class life.“Since the president has taken office, 13 million jobs have been created,” Lael Brainard, Mr. Biden’s top economic adviser, said Tuesday. “The unemployment rate is near historic lows, below 4 percent for the longest stretch in nearly 50 years. And we’ve received record low unemployment for groups that too frequently have been left behind.”The boasting about Mr. Biden’s economic achievements is a calculated shift from the more cautious approach of his first two years, when millions of Americans were still struggling to recover from the devastating impact of the pandemic on their financial well-being.And the positive spin from the president and his advisers largely ignores the frustrations of many Americans who are still suffering from the effects of high inflation, interest rates that make borrowing more expensive, and the expense of everyday spending on necessities like health care, child care, groceries, gas and more.“While families suffer, the Biden administration is in a fantasy world, insisting their ‘policy has indeed worked,’” Tommy Pigott, a spokesman for the National Republican Committee, said in a statement on Tuesday. “Americans don’t want Biden to ‘finish the job.’”Mr. Pigott cited figures showing that the price of a gallon of gas remains about a dollar higher than it was when Mr. Biden took office, despite declines since the price shocks when Russia invaded Ukraine. He said numbers from the National Energy Assistance Directors Association show about 20 million Americans are behind on their utility bills.But administration officials are betting that with the pandemic largely in the rear view mirror, people will soon begin to appreciate the positive effect they say the president’s policies are having on their own lives.“I think people all across the United States of America are starting to see shovels in grounds in their communities,” said Olivia Dalton, the deputy White House press secretary. “As we get further into implementation, people are going to continue to feel that. They’re going to continue to see that and they’re going to continue to hear from this president about how we’re going to continue to make progress for them.”For now, most Americans have refused to give Mr. Biden the kind of credit that he and his advisers say he deserves. Polls show that about three-fourths of those surveyed believe the country under Mr. Biden’s leadership is on the wrong track. Only about a third say they approve of his handling of the economy.The president’s advisers say they believe it will take time for two things to happen: First, Americans must shake off the economic hangover from the pandemic. And second, they must begin feel the benefits of Mr. Biden’s policies in action.“People are just starting to see the impact of all of the successes of the last couple of years under this president’s economic agenda,” said Olivia Dalton, the deputy White House press secretary.Eventually, Mr. Biden will have to shift his focus to the future, and make specific promises to Americans about what kinds of new economic policies he would pursue in a second term.That could include making progress on the economic pledges he had to abandon as he made legislative compromises since taking office. He failed to win sufficient support for his proposals to roll back tax cuts implemented by former President Donald J. Trump. He also dropped proposals for universal preschool, free community college and heavily subsidized child care. More