December 07, 2023

Watch any cable channel and invariably it has a segment discussing how President Biden’s Job approval rating and the voters’ views on the direction of the economy are underwater. Yet ask any White House official, and in particular the current Press Secretary Karine Jean-Pierre, and their answer is that Bidenomics is working, and the abysmal ratings reflect a messaging problem. In support of Bidenomics the proponents mention that the inflation rate and gasoline prices have come down from their peak. They cite record employment numbers, the increase in hourly wages, and an unemployment rate that has remained near-record rates. Then there is the most recent reading of real GDP, which puts the pace of economic activity expanding at a 4.9% annual rate during the third quarter of 2023. Still, in spite of these favorable economic statistics, just 38% of voters approve of the president’s economic stewardship. The White House says this is a messaging problem. If that is the case the solution is to change the messaging and stay the course – in other words, double down on Bidenomics. That seems to be the Biden administration’s view. Under this scenario President Biden has less than a year to convince voters that they are better off than they realize. So far, he is not doing a convincing job. Perhaps that is the reason for the new messaging. But what if instead of messaging, the issue is Bidenomics? How would we go about finding out? To find out we borrow a page from when President Reagan ran for office in 1978. he asked the voters a simple question, ‘Are you better off today than you were 4 years ago?’. He knew the answer to the question. It was contained in the famous Misery Index, the sum of the unemployment rate plus the inflation rate. Since then, millions of voters have used these simple measures to determine whether they are better off than they were four years earlier. Although more nuanced today the issue is the same. Are we better off today than we were under Donald Trump up until the point when he shut down the economy? The Misery Index verdict provides a simple explanation for President Biden’s dismal job-approval ratings. The Misery Index stands at slightly below 7.5% while prior to the shutdown the Misery Index stood at nearly 5%. The data suggests that the economy is worse off today than it was prior to the economic shutdown. Even if the Misery Index is correct, will the Biden administration change course? We doubt it. The policymakers within the Biden administration have a strong degree of conviction in their economic view and as a result are unwilling to change it even if the data suggests that a change is in order. We attribute the strength of the belief to the stock market’s success, to Obamanomics and Obama’s getting reelected to a second term in spite of facing what appeared to be dire conditions at the end of his first term. The parallel has not escape the Biden administration.

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