President Joe Biden recently delivered a speech addressing the American people’s concerns about the economy. Despite polls indicating that only around 38.3 percent of American voters have confidence in his handling of the economy, Biden remains confident in his abilities. His speech aimed to reassure the nation that things are looking up and that his policies will lead to significant improvements. However, the economic realities suggest that his message may not gain widespread acceptance.
Biden will need to do more than just deliver a speech to convince Americans of his economic prowess. Since taking office, his approval ratings on economic matters have consistently declined. In March 2021, shortly after the second pandemic relief bill was passed, approximately 60 percent of American adults approved of Biden’s overall performance. However, as signs of inflation emerged, his approval ratings began to plummet, reaching recent lows.
Despite these decreasing approval ratings, Biden boldly asserted his administration’s economic stewardship, referring to it as “Bidenomics.” He made four arguments in support of his approach. First, he pointed to the strong job market, noting that payrolls grew by 209,000 in June, following an even stronger figure in May. The unemployment rate, though higher than its lows, remains historically low at 3.6 percent. The second part of his speech highlighted how the economy has managed to avoid the recession that many anticipated when the Federal Reserve began raising interest rates to combat inflation.
The third section of Biden’s speech focused on inflation, albeit on shaky ground. He acknowledged that inflation has slowed from its peak a year ago, currently standing at an annual rate of 4 percent, less than half of what it was in June 2022. However, he failed to provide a compelling reason why this improvement would continue. In the final part of his speech, Biden promised substantial economic improvements through targeted investments, contrasting his policies favorably to tax cuts. He cited last year’s bipartisan infrastructure bill, legislation to subsidize domestic semiconductor manufacturing, and the recent announcement of $40 billion for nationwide high-speed internet as evidence of his economic strategy’s potential. Nonetheless, he admitted that these effects would take time to materialize.
Despite the optimistic framing of his speech, Biden omitted several economic indicators and perspectives that might explain his low approval rating on economic matters. Notably, real wages have failed to keep up with inflation, declining over 3 percent since he assumed office. Other key economic indicators point to slow growth or signs of an impending recession. During the first quarter of this year, the country’s real gross domestic product (GDP) increased by a meager annual rate of 2 percent, significantly lower than historical averages. Consumer spending, which accounts for two-thirds of the economy, grew at a real annual rate of only 0.8 percent in the three months ending in May.
If Biden’s speech is a glimpse into his strategy for the 2024 election, he is taking a high-risk approach. With the election still 16 months away, the economy would need to visibly improve over that time for his economic perspective to gain traction. However, the Federal Reserve plans to raise interest rates in the coming months and potentially maintain them at higher levels until inflation retreats to a preferred rate. This policy stance suggests ongoing high rates that, while not guaranteeing a recession, do not indicate an economic upturn. Biden also promised sustained improvements in inflation, but history shows that inflation tends to follow a diverse trajectory and is likely to worsen at some point. Furthermore, wages are not expected to catch up to inflation soon. While there is a possibility of positive outcomes, it seems more likely that economic conditions will worsen before improving.
In conclusion, President Biden’s recent speech aimed to assuage concerns about the economy but faces an uphill battle in gaining acceptance. Despite his confidence in his economic policies, his approval ratings have consistently declined. Economic indicators and alternative perspectives highlight significant challenges, such as stagnant real wages and slow growth in key sectors. Biden’s strategy for the 2024 election depends on visible economic improvements in the months ahead, but current policies and likely inflation trends suggest that conditions may deteriorate before any substantial improvements occur.