Economic Recovery But Nation's Damaged Psyche Might Not Secure Biden's Re-election
"Are you better off than four years ago" is Trump's Best message
As the United States grapples with economic recovery and the promise of growth in the coming year, a prevailing narrative challenges the assumption that a buoyant economy will necessarily translate into political victories for President Biden in the 2024 election. While economic indicators such as GDP growth and inflation reaching the Federal Reserve's target are on the horizon, a closer examination reveals a complex interplay between economic realities and the psychology of voters.
One central argument against the immediate electoral benefits of economic upturns is the time lag in how these changes impact the average person. Historically, it takes at least six months for economic shifts to permeate through markets and influence the daily lives of citizens. This temporal disconnect suggests that any improvements in the economy by the end of October 2024 might not be palpable at a significant level for voters.
However, a more profound reason lies in the lasting psychological effects of major economic shocks on individuals. The scars of financial crises, like the one in 2008, linger in the collective memory, influencing voter sentiment for years. The aftermath of the 2008 crisis saw the Republican party facing a severe setback in the elections, and even in 2012, voters were not in a forgiving mood towards the GOP (although the usual midterm swing went against the Obama administration). The Great Depression era further illustrates that despite slow economic recovery, the Democrats under Roosevelt and Truman retained power from 1932 to 1952 until memories of the crisis faded with time and returning prosperity.
In recent times, the COVID-19 pandemic had a similar psychological impact, contributing to President Biden's significant popular vote win. The scars left by the pandemic created a backdrop that influenced voter choices, showcasing how other shocks, including foreign policy failures as under Carter and LBJ, can shape political landscapes.
Looking ahead to the 2024 election, even if inflation has abated, the four-year impact of significant inflation could affect nearly everyone's standard of living. Housing affordability, a critical factor for many, has become a major concern. While recent data from ‘State of the Union’ suggests some optimism with 26% believing that inflation is moving in the right direction, the broader economic picture indicates a more nuanced reality.
Despite a positive trajectory, challenges persist. Wage growth, though showing signs of improvement, might not outpace inflation until the end of 2024, according to experts. The recent job market performance, with the US economy adding 199,000 jobs in November, is commendable, but its impact on wages is still unfolding.
According to the Wall Street Journal The University of Michigan's consumer sentiment survey highlights the rising confidence fueled by positive shifts in the expected path of inflation. However, concerns about inflation persist, with reports indicating a decline in real wages by 3.1% under President Biden's watch. The discrepancy between nominal salary increases and the rising cost of living with inflation around 17% over the time of “Bidenomics” has left many American workers worse off than when Biden assumed office.
In conclusion, the paradox of prosperity suggests that economic recovery alone might not secure President Biden's re-election. The intricate interplay between the temporal lag of economic changes, the lasting psychological effects of past crises, and the real-time challenges faced by individuals demands a nuanced understanding of the complex relationship between economics and politics in the upcoming election. Trump’s message of “You were better off when I was in office” has strong parallels with then candidate Ronald Reagan’s message of “Are you better off than four years ago” and history shows, time and again, that is the winning message