It’s Still the Economy, Stupid!

The skies are darkening above the Democrats’ heads one year from the midterm elections, while the return of inflation suggests to voters that an economic storm may be in the offing.

Few remarks have shaped American political folklore more than when James Carville, adviser to Bill Clinton during the 1992 presidential race, spoke about the main factor to consider in the election. “The economy, stupid,” read a sign posted in Carville’s campaign office.

It can be tempting, particularly when new politicians like Barack Obama or Donald Trump emerge — or even when a presidency experiences a series of crises, as Joe Biden is doing, to look for a thousand and one important factors that affect public opinion and, by extension, election results.

However, the determining factor tends to remain the same: the economy. And the current economic environment provides nothing for the White House to cheer up about.

The Primary Issue

In its first national poll conducted at the beginning of the month, Politico asked American voters about what they considered the main issue as 2022 midterm elections approach. The results speak for themselves: Close to 40% responded that it was the economy, twice as many as those who considered security their main concern.

In the same poll, the approval rating for Biden’s management of the economy was only 40% — five points lower than his overall approval rating. Put differently, the primary issue on voters’ minds is helping lower the president’s approval rating. Another concern for the Democrats is the fact that twice as many voters say they strongly disapprove of the president’s economic management than those who strongly approve of the job he is doing.

These results corroborate those of another national poll conducted by The Economist during the same time periods, in which fewer than one-quarter of all Americans consider the actual state of the economy to be “excellent” (3%) or “good” (20%). Asked how important questions about the economy are, two-thirds (67%) responded “very important” — more so than crime, civil liberties, abortion, firearms, the environment or even national security. The president’s approval rating in relation to the economy stands at 42%.

Without making headlines, opinion polls show similar indicators have been growing for weeks. Why?

Repercussions, Months Later

The same fundamental question was raised when the first economic aid plan was passed by Congress in March 2020 (around $2 trillion), and again when the second economic relief plan was passed last December (around $1 trillion), and once more when the third aid package passed last March, (around $2 trillion): To what extent can the Federal Reserve print money (by means of bond purchases) and the American federal government inject billions of tax dollars into the economy?

Last spring, the response started to become evident: Beyond the issue of a balanced budget, a noticeable problem of inflation took shape. Nevertheless, the signals from Washington, both from the White House and the Fed, were going in the opposite direction.

And yet, reality is catching up with the Biden administration and the Fed. This week, the Consumer Price Index registered its biggest increase in 13 years, the largest increase since the last major financial crisis.

And after having spent the better part of the year brushing aside the possibility of raising interest rates, that is now precisely the path on which the Fed has embarked.

Ordinary Americans are already feeling the pinch only too well. In a recent discussion group led by the pollster Sarah Longwell, an issue reemerged more than any other: economic “malaise.” The discussion group included only Democratic voters, and even among them, the assessment was clear. As a respondent explained in the most basic terms: “It cost $5 to buy a case of bottled water; now, it’s $7.50. That hits people in their wallets; it hits my wallet.”

Along with the problem of inflation is the problem of involving a weak rate of participation in the labor market and the broken supply chain. The breaks in supply chains is considered so troubling that on Wednesday, the president felt the need to announce that ports such as Los Angeles would be operational 24/7.

The United States has perhaps emerged from one of the worst economic crises as a result of the pandemic, but the decisions taken since 2020 may also adversely affect the economy, as we can now see, and may have devastating repercussions for Democrats come next year’s election.