The President's economic record will not be a winner on the campaign trail
With the announcement that inflation fell to 3% in June, the US President will no doubt be emboldened in his claim that Bidenomics — essentially a green-tinted government-led economy — is working. Indeed, Joe Biden has been on the trail touting his record, arguing that the economy has thrived under his leadership.
Yet only one-third of Americans approve of his handling of the economy overall, which is a cause of endless frustration to the codger-in-chief and his enablers, now also coping with a public that sees the President as morally compromised.
People dislike Bidenomics for the best reason there can be: it’s not working. Despite inheriting a post-pandemic economy with lots of room to grow, Biden thought the White House should be in charge of it. The results have been mediocre at best — soaring debt, a huge boost in inflation and, most importantly, a record decline in wages. Unemployment is low, in large part due to a diminished workforce, and the stock market has recovered. But the US is hardly booming, with a GDP growth rate under 2%, about the same as most stagnating Western European countries but well below India, China and even some South American countries.
Some of the problem stems from the fact that the President’s policies have been crafted less to boost the economy overall and instead to remake it in a greener guise. Unlike past infrastructure projects — such as the Tennessee Valley Authority that brought electricity to underdeveloped sections of the US, or the Interstate highway system that improved mobility and tied together disparate parts of this vast country — the renewable energy obsession seems unlikely to boost the overall economy. More likely, it will leave a legacy of shortfalls and higher energy prices, as has been the case in all the greenest countries like Germany and Denmark, as well as states such as California.
Of course, some have benefitted from Biden’s largesse on climate, notably investment banks, university researchers, tech companies, and manufacturers of solar panels and batteries. Other initiatives, like the CHIPs Act, hold more promise, and at least offer an alternative to becoming vassals of East Asia.
But, as noted by longtime Democratic analyst Ruy Teixeira, the main focus has been greening, an obsession that weakens its appeal to ordinary Americans. Teixeira suggests that voters are sceptical about the “purpose of this spending”, and wonder whether it helps the country grow or improve their own economic prospects. We can already see that Biden’s policies have failed to spark an overall industrial recovery. In fact, industrial activity is now shrinking faster than at any time in the last three years.
But perhaps the biggest miss may be on Main Street. After a nifty rise in new firms at the end of the pandemic, we now see the number of new incorporations slackening off, in part due to rises in interest rates designed to curb inflation. In addition, small business optimism in the US is at its lowest point in 10 years. A boom in artificial intelligence may consolidate oligarchic power, but there’s not much cause for happiness among the merchant class.
If Biden has to run on his economic record against successful governors like Nikki Haley, Glenn Youngkin or Ron DeSantis, the result will not be pretty. But the President’s Irish luck may still hold up. The last of this trio has decided to run as culture war Savonarola rather than a reborn Reagan, squandering an opportunity to hit Biden where it hurts. However dishonest his claims to economic prowess, Biden seems lucky in his opponents — a luck that may yet reward him with Donald Trump in 2024.