It’s the Economy, Again
Economic discontent at election time almost always heralds doom for the political party that holds the White House. But the economic malaise that has bedeviled the country throughout the presidency of Joe Biden is likely to weigh even more heavily now that the Democrats are attempting to pass the presidency on to his vice president, Kamala Harris.
While it’s true that inflation has fallen from the worst levels seen in four decades, the annual rate of inflation remains higher than it has been since the economy was staggering from the financial crisis. What’s more, the period of high inflation has lasted longer than any time since the Carter administration, leaving American households reeling from runaway price increases.
In an ironic replay of what happened to President Donald Trump in 2020, history suggests that voters are unlikely to feel much better even if inflation continues to fall.
The Federal Reserve’s latest projections—released in June—for inflation at the end of this year have the personal consumption expenditures (PCE) price index rising 2.6 percent over 12 months, a bit more than the 2.4 percent they were projecting in March. Core prices, which strips out food and energy prices, are expected to be up 2.8 percent, higher than the 2.6 percent rate expected in the earlier projections.
Some economists now expect that inflation may be even lower at the end of the year than the Fed was expecting in June. The PCE price index fell below the Fed’s year-end projection two month’s ago, they argue. But we were below the current level earlier this year, only to see inflation revive. History is rife with examples in which seemingly vanquished inflation rises again to ravage the country.
Memories of Economic Pain Fade Slowly
In any case, even a steady improvement in inflation is likely to be of little comfort to the incumbent vice president seeking the main office. The Biden-Harris administration has controlled the White House for nearly four years, and voters are unlikely to forget Kamala Harris’s role as the chief cheerleader for Biden’s widely disliked economic policies. As Republicans will no doubt remind voters daily through the election, Harris’s tie-breaking vote was responsible for the passage of many of Biden’s key pieces of economic legislation, including the budget busting and inflationary laws called the American Rescue Plan and Inflation Reduction Act.
Vice President Kamala Harris delivers remarks in support of the American Rescue Plan on April 15, 2021, in Washington, DC. (Chip Somodevilla/Getty Images)
It’s not just that inflation got so high. The length of the Biden inflationary episode that is still underway has been unusually protracted. As measured by the PCE index, we’ve now been above 2.4 percent inflation for forty consecutive months. The last streak of inflation staying that high for that long ended in 1991—and that streak was killed off by a recession.
Voters’ negative view of the economy in this Biden-era of inflation has likely been elevated by the fact that it has been so long since inflation was a long-lasting and severe problem. It’s as if an ancient ghost we thought we had exorcised from our economy is now once again haunting us.
By the election of 2020, the U.S. economy was clearly recovering from the pandemic. The “v-shaped recovery” that establishment media and Democrats had mocked Trump economic adviser Larry Kudlow for touting was underway. But unemployment remained high, and many Americans still felt that the economy was in shambles, an idea relentlessly promoted by Biden and Harris. The fast onset of the recovery was not enough to save Trump’s presidency because the wounds of the pandemic—including one of the steepest ever downturns in economic output and an unprecedentedly swift rise in unemployment— still stung.
Even an improvement in inflation confirmed by rate cuts from the Fed is unlikely to erase the memories of what the public experienced while Harris and Biden occupied the White House.
