“We still have to tackle the costs that American families are facing, but this recovery is faster, stronger and fairer and wider than almost anyone could have predicted,” Biden said. “That’s what the numbers say.”
The president also acknowledged that voters can't just rely on the numbers — they need to “feel it in their lives and their bank accounts and their hopes and expectations.”
This question as to whether Americans are feeling what the economic numbers show is at the heart of Biden's challenge in the months leading up to the 2022 elections, when control of the House and Senate could possibly slip from the Democrats. It's not enough for the president to highlight Friday's employment report of 531,000 job gains and a 4.6% unemployment report in October, so long as the pandemic rages and shortages of basic goods ranging from auto to furniture keep pushing up prices.
Beneath this challenge rests a deeper set of questions about how politics and the economy mingle after the pandemic. Do Americans care more about job growth or inflation? Are they skeptical that government spending can permanently improve the economy for the better? Can Democrats expect to be rewarded for their results or are voters indifferent to policy achievements?
These questions also posed an obstacle as House Democrats on Friday finally approved Biden’s bipartisan $1 trillion infrastructure deal, which had already cleared the Senate. The House also moved forward with a $1.85 trillion measure bolstering health, family and climate change programs, with a plan to vote on it by the week of Nov. 15.
After attending the U.N. climate summit, Biden suggested at a Tuesday news conference in Glasgow, Scotland, that the failure to pass his agenda earlier would have no impact on how the Democrats fared in the 2021 election.
“I’ve not seen any evidence that whether or not I am doing well or poorly, whether or not I’ve got my agenda passed or not is going to have any real impact on winning or losing,” the president said. “Even if we had passed my agenda, I wouldn’t claim, ‘We won because Biden’s agenda passed.’”
Economists across the ideological spectrum noted that the country faces an unusual situation after the coronavirus. The delta variant appears to have hobbled growth late this summer and the rush of money from the government caused consumer and business demand to surge in ways not seen in recent recoveries.
As a result, some reliable indicators of the economy have become less reliable. Yes, there has been a solid recovery in hiring yet so many people have stopped working or seeking jobs that the adjusted unemployment rate is closer to 7.3%, instead of 4.6%, said Heidi Shierholz, president of the liberal Economic Policy Institute and a former chief economist at the Labor Department.
“We are still in a huge hole,” Shierholz said. “Coming out of the COVID recession has created some unique circumstances that people never experienced before."
This created a Dickensian-like framework in which it could be the best of times and the worst of times. The economy is poised for the fastest growth since 1984 and the stock market’s Dow Jones industrial average hit a record high this week. Yet inflation is running high at an annualized rate of 5.4% and eating into paychecks. Employers are struggling to find workers despite raising wages. Container ships are stuck waiting to dock at ports, creating empty shelves and long delays for consumers ahead of the holiday shopping season.
“Inflation is outpacing wage gains and that’s a big problem," said Michael Strain, director of economic policy studies at the center-right American Enterprise Institute. “It feels like the economy has gotten worse.”
Average gasoline prices have jumped more than 60% from a year ago to $3.42 a gallon, according to the American Automobile Association. The jump has been so swift that Biden last week called on OPEC nations to pump more oil even as he simultaneously called for moving away from fossil fuels to have a zero-emissions economy by 2050.
Voters so far seem to believe that the economy would fare better under Republicans.
In Tuesday’s election in Virginia, more than a third of voters said the economy was their top priority, according to AP VoteCast. Of that key group, 63% broke for Youngkin on the belief that a Republican could do more for growth.
More importantly, 54% of Virginia voters said they disapproved of how Biden was handling the economy. That nearly matches a recent AP-NORC survey in which 58% nationwide disliked the president's economic stewardship, a sharp reversal from March when 60% backed Biden on the economy.
Republican lawmakers have been effective at hammering Biden and Democrats on the inflation issue. The Biden administration initially tried to minimize inflation as a problem by calling it transitory, but the consensus by many economists is that it will keep running above the Federal Reserve's 2% target until the second half of next year.
Senate Republican Leader Mitch McConnell interpreted the results of Tuesday's elections as a rejection of Biden's economic policies.
“Washington Democrats have super-charged inflation, re-created welfare without work requirements, and made America significantly less energy independent," the Kentucky senator said in a Wednesday floor speech. “The American people will not stand for this. That’s what voters told Democrats last night."
There is also the possibility that Biden misread what voters were saying in last year's elections. Much of the president's ability to create a broader coalition came from opposition to Donald Trump, rather than a full embrace of his ideas. Paul Winfree, director of economic policy studies at the conservative Heritage Foundation, interprets the disapproval of Biden as a sign that voters see his expansion of government spending as going too far to the left.
“The 2020 election was a referendum on Trump as an individual more than anything else,” Winfree said. “Now we see voters saying that the Democrats have misidentified their mandate.”
Stuart Stevens, co-founder of the Lincoln Project, a conservative group that staunchly opposes Trump, said that Biden has struggled to communicate its successes with the economy. He noted that many Americans believe the country is on the wrong track even though vaccinations are up, the stock market is climbing and the unemployment rate is falling.
Stevens concluded Friday on Twitter: “The Democratic Party has a huge messaging problem.”