President Biden: "Economic substance over form?"

Get the Point!

According to the Bureau of Labor Statistics latest U.S. Jobs Report, 336,000 Americans found jobs in September, a figure that more than doubled the 170,000 jobs that Wall Street economic forecasters expected for the start of the fourth quarter of this year. These latest numbers further underscore 33 consecutive months of job gains—a fact that should be strong political currency for President Joe Biden as he heads into his 2024 rematch with likely Republican presidential nominee Donald Trump. 

President Joe Biden

With unemployment figures under the Biden administration remaining at 3.8 percent, it would seem that the president would be riding high on those two economic indicators but in reality, the perception among many Americans is that the economy has weakened under his leadership—so much so that recent polling data suggests that if the election was held today, that Trump would hold anywhere from a one to three percentage point advantage over Biden in the popular vote. 

Why?

The first and most critical answer to "why" is inflation, and the pinch that consumers feel at the supermarket, restaurants, hotels, and the like. Yes, I know that the Federal Reserve has held off raising interest rates of late and I will analyze that some below, but suffice it to say that when consumers see that a three piece spicy with red beans and rice and a drink from Popeyes costs $12 dollars, or that a McDonald's Happy Meal costs $8 dollars, well, that doesn't make spenders very happy at all. 

More crucially, with mortgage rates hovering around 7.5 percent, and insurance companies charging 20 percent interest (and credit card companies much higher) on premiums and installments, the fact that average Americans are working and earning slightly higher wages is offset by the higher prices that are gobbling up their paychecks. 

Now, it is a long held axiom of democratic politics that people tend to vote their pocketbooks, but I would caution conservative to moderate Democrats—and Democratic leaning independents—to think long and hard before placing ALL of the blame for high prices on the current presidential administration. 

I write this because the simple truth is that the global economy is still being heavily impacted by the Covid-19 pandemic; the delays in the transfer or shipment of goods is the oft stated reason agriculture companies and manufacturers cited (and still cite) for charging higher prices! Just as the Covid-19 pandemic started during the last year of the Trump administration, so did the price increases so to be fair and logical, had Trump won the 2020 election, he, too, would be saddled right now with the very price increases that are causing so much consternation among middle class and lower income Americans. 

Ditto for global and domestic travel and tourism related industries worldwide; anyone who has flown since Covid restrictions started being lifted can attest that the cost of air travel is three and four times what it was before the pandemic began. Similarly, as a longtime Hilton Honors member, I have given the side-eye multiple times over the past 18 months as rooms at Hilton properties, like the Hampton Inn, have skyrocketed from $79 dollars per night to as high as $300 dollars per night in some locations! Indeed, it doesn't take a Keynesian economics expert to conclude that the tourism industry is trying to make up for lost profits from 2020 to 2022—to our collective consumer chagrin!

Which leads to my conclusion: As I often write, presidents get too much credit when things are going well on the economic front, and too much blame when things are not going as well with regards to the same. In a recent MSNBC interview, former President Trump shunned his comedic act for a few minutes when asked about price increases and gave a rather mature response to NBC host Kristin Weller, which was that if he is elected in 2024, that he would lean very heavily on Jerome Powell, his 2018 appointee as Federal Reserve Chairman, to lower interest rates to pre-2020 levels.

Said Trump (On Meet the Press): "I would get inflation down, because drill we must. We will be drilling for oil. We are going to become, again, energy independent. We are going to reduce our debt, because we're also going to become energy dominant."

While the skeptic in me knows that the days of America being energy independent, at least with respect to oil, are gone with the wind, I do know that when people feel desperate for pricing relief, that Mr. Trump's words could "trump" Mr. Biden's recent deeds with regards to pushing for (and signing) laws that have put people to work fixing America's long neglected highways, roads, and bridges; ameliorating and even eliminating student debt that frees up more discretionary consumer spending, and yes, the Federal Reserve’s recent interest rates freeze amid its stated goal of getting the rates as close to two percent as possible—all on Biden's watch!

People lie, objective statistics don’t…

This time next year, if the status quo holds, Biden and Trump will have completed their first debate and be heading into their second prime time tilt. In the interim, while many Americans will continue to focus on the more sensational aspects of the race over the next 12 months, such as whether Trump will be found guilty of one of the four felony offenses that he is facing, or, the traditional and social media ageism narratives that Biden is too old and lacks the mental acuity for the job, what it will all really boil down to next Fall is the age-old political question: "Are you better off financially today than you were four years ago?" History has shown, time and again, that when voters head into their booths to vote, their final decision will turn on whether their answer to the question is "yes" or "no."

Stay tuned...