{"id":1443,"date":"2023-10-15T14:15:12","date_gmt":"2023-10-15T14:15:12","guid":{"rendered":"https:\/\/connectwithfund.com\/economy\/opinion-biden-gets-no-credit-for-the-improved-u-s-economy-but-that-wont-cost-him-votes\/"},"modified":"2023-10-15T14:15:12","modified_gmt":"2023-10-15T14:15:12","slug":"opinion-biden-gets-no-credit-for-the-improved-u-s-economy-but-that-wont-cost-him-votes","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=1443","title":{"rendered":"Opinion: Biden gets no credit for the improved U.S. economy \u2014 but that won\u2019t cost him votes"},"content":{"rendered":"
\n

The U.S. economy and voter polls have been delivering both good and bad news to Joe Biden, but Republicans have more to worry about than what voters think of the U.S. president.<\/p>\n

U.S. inflation has moderated\u00a0and\u00a0jobs growth\u00a0is generally robust. Voters\u00a0feel better about the economy,\u00a0but\u00a0don\u2019t give Biden much credit for it. In 2022, real household incomes fell for the\u00a0third year in a row. The\u00a0negative trend in real wages continued until May of this year\u00a0and reemerged in September. Gasoline\u00a0and\u00a0housing\u00a0are more expensive. The latest year-over-year reading for the\u00a0Consumer Prices Index is 3.7%.<\/p>\n

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Bidenomics\u00a0has\u00a0three\u00a0pillars: radically redirecting the economy away from fossil fuels to wind and solar power and electric vehicles; strengthening national security by ensuring enough of the durable goods supporting those environmental industries and semiconductor production are made in America, and redressing income inequality by strengthening unions and participation by minorities in both infrastructure and industrial policy spending.<\/p>\n

Yet generating green energy is proving more expensive than anticipated. In Texas, for example, voters are being asked to approve\u00a0special funding to subsidize the construction of natural gas generating plants\u00a0to back up the state\u2019s green power when the wind does not blow and peak demand outruns what the sun can provide.<\/p>\n

Most of the cost of wind and solar power are upfront. Those don\u2019t require ongoing fuel purchases and\u00a0employ fewer workers\u00a0but are capital intensive. Green energy made more economic sense when interest rates were low, but those are likely to stay high and\u00a0some offshore wind projects are being abandoned. Utility regulators are reluctant to approve the rate increases necessary to cover higher debt service.<\/p>\n

Inevitably, we must pay for green energy with higher electricity rates, taxes to pay for subsidies, or as-is current policy \u2014 namely the federal government borrowing to partially underwrite green energy and EVs. In 2019, the U.S. budget deficit was less than $1 trillion. For 2023,\u00a0it likely will reach $1.6 trillion\u00a0and keep growing. That pushes up interest rates and drives inflation.<\/p>\n

Big deficits and too much demand are important reasons the labor markets remain out of balance. The ratio of\u00a0job seekers\u00a0to job openings is\u00a0about 1.5.\u00a0In the golden decade prior to COVID when inflation was tame, the ratio was much lower.<\/p>\n

An analysis by former\u00a0Federal Reserve Chairman Ben Bernanke, now a distinguished senior fellow at the Hutchins Center at Brookings, and Oliver Blanchard, senior fellow at the Peterson Institute for International Economics, indicates the\u00a0job seekers\u00a0to job openings ratio would have dip below 1.0\u00a0to get the U.S. back to 2% inflation. <\/p>\n

The last time the nation faced such an inflation challenge\u00a0then-Chairman Paul Volcker moved quickly to raise interest rates. Current Fed Chairman Jerome Powell has reasons to go more slowly. A sizeable amount of\u00a0commercial real estate and corporate debt\u00a0are coming up for renewal this year and through 2027. The more the Fed pushes interest rates higher, the greater the likelihood for more regional banks failures and corporate bankruptcies.<\/p>\n

But going slowly causes inflation expectations to harden. The Conference Board\u2019s measure of one-year inflation expectations has been stuck at around 5.7% for months. Meanwhile, the\u00a0New York Fed\u2019s measure\u00a0is 3.6%.\u00a0Those average to 4.7%, slightly higher than the current 4.3% pace of core U.S. inflation.<\/p>\n

With all of this, Americans don\u2019t expect things to get a lot better. The benefits of Biden\u2019s programs are rifle-shot \u2014 those workers putting up new semiconductor plants or in a union are looking forward to bigger paydays. Yet unions represent\u00a0just 6% of U.S. private-sector workers, and most voters are not riding the infrastructure and industrial policy gravy trains.<\/p>\n

The U.S. economy will likely\u00a0slow towards the end of this year and into 2024\u00a0as\u00a0consumers run out of pandemic-era savings. In addition, tighter credit\u00a0plus the\u00a0restarting of student debt payments limit consumers\u2019 capacity to compensate by borrowing, Still, the slowing is more likely to be sub-1% growth than a recession, and stronger growth should resume in time for the 2024 presidential campaign.<\/p>\n

<\/p>\n

<\/p>\n

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\n \u201c<\/span>Enough voters in key battleground states \u00a0that Trump flipped \u00a0in 2016 appear to be willing to stick with Biden.\u201d<\/span>\n <\/p>\n<\/p><\/div>\n<\/p><\/div>\n

Currently, some polls indicate\u00a0former President Donald Trump could win mores vote than Biden in 2024.\u00a0Yet Trump\u2019s advantage is not as great as Democratic presidential candidate Hillary Clinton\u2019s was in 2016 when she won the U.S.\u00a0popular vote\u00a0but lost in the Electoral College. Moreover, the Republicans\u2019\u00a0obsession with cultural issues\u00a0and Trump\u2019s ongoing legal problems make him even less appealing than Biden in states like\u00a0Wisconsin,\u00a0\u00a0Michigan\u00a0and\u00a0Pennsylvania. Enough voters in these and other battleground states that Trump flipped\u00a0in 2016 appear now to be willing to stick with Biden.<\/p>\n

Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.<\/em><\/p>\n

More: <\/strong>1970s-style stagflation may be at risk of repeating itself, Deutsche Bank warns<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. economy and voter polls have been delivering both good and bad news to Joe Biden, but Republicans have more to worry about than what voters think of the U.S. president. U.S. inflation has moderated\u00a0and\u00a0jobs growth\u00a0is generally robust. Voters\u00a0feel better about the economy,\u00a0but\u00a0don\u2019t give Biden much credit for it. In 2022, real household incomes fell for the\u00a0third year in a row. The\u00a0negative trend in real wages continued until May of this year\u00a0and reemerged in September. Gasoline\u00a0and\u00a0housing\u00a0are more expensive. The latest year-over-year reading for the\u00a0Consumer Prices Index is 3.7%. Bidenomics\u00a0has\u00a0three\u00a0pillars: radically redirecting the economy away from fossil fuels to wind<\/p>\n","protected":false},"author":1,"featured_media":1444,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[38],"tags":[],"class_list":["post-1443","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy"],"yoast_head":"\nOpinion: Biden gets no credit for the improved U.S. economy \u2014 but that won\u2019t cost him votes | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"The U.S. economy and voter polls have been delivering both good and bad news to Joe Biden, but Republicans have more to worry about than what voters think\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/connectwithfund.com\/?p=1443\" \/>\n<meta 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