Robert Reich: When Will Americans Start Crediting Biden With A Great Economy? – OpEd

On Friday, the Labor Department’s Bureau of Labor Standards issued its monthly report on jobs — and it was a doozy. Jobs and real wages (wages adjusted for inflation) continue to rise. 

So when will Americans start crediting Biden with this great economy? 

There’s always a lag time between when the economy turns positive and when voters begin to feel more positive about an administration. 

As I said on MSNBC Friday evening, I believe the tide is turning and Americans will begin to credit Biden with a great economy three to four months from now, which is time enough for Biden to use that credit to be reelected. 

Of course, the upcoming election will also hinge on other issues — Netanyahu’s bloodbath in Gaza, abortion, and immigration, to name a few — but the economy is likely to be the biggest single issue in voters’ minds. 

My optimism is based on two surveys that measure how positive people feel about the economy: the index of consumer sentiment (which comes from a survey by the University of Michigan) and the index of consumer confidence (as measured by The Conference Board). The sentiment survey tells us how consumers feel about buying something now. The confidence survey essentially asks how they think they’ll feel about buying in the future. 

In election years, both measures correlate highly with whether people vote for incumbent presidents. 

When consumer sentiment and confidence are trending downward (as they did in 2016 and 2020), the incumbent or incumbent’s party loses. When they’re trending upward (as now), the incumbent wins. 

Take a look at these charts of consumer sentiment and consumer confidence. Both lag behind the actual economic news on jobs and real wages, but both now show positive trend lines. 

Index of consumer confidence: 

As I’ve noted before, Trump is benefiting from a bad long-term economic trend — the near stagnation of the wages of hourly workers (most of them white, older, rural, and without college degrees). This trend has been ongoing for over four decades, as the middle class has shrunk. Hence, a large number of people have become susceptible to a demagogue wielding anger and vengeance. 

Consumers also face the ongoing problem of food prices. They remain high and are rising largely because of monopolies in the food chain — from seeds all the way through food processors and grocery stores. Biden trustbusters are attacking this but it will remain a vulnerability. 

Mortgages, auto loans, and credit card debt are high because the Fed hasn’t yet begun to reduce interest rates. Hopefully, this will begin over the next three or four months. 

As the election approaches, I expect positive feelings about the economy to overtake these headwinds. Which is why I continue to be nauseously optimistic.

This article was published at Robert Reich’s Substack