WASHINGTON (Reuters) – American household wealth is near a record high as people go out to restaurants, travel and buy new cars. The job market is also doing well and is a sales market for job seekers. Despite this, the public is becoming dissatisfied with US Democratic President Biden. Opinion polls show Republicans could win Congress in Wednesday’s midterm elections.
Various polls show that it is economic pessimism that pushes people in this direction. There is a great discrepancy between public perception and the current economic situation. The president’s approval rate is low, at 40%.
High inflation is what worries people most, but the economy as a whole has a low unemployment rate of 3.7% and the labor market is the best in decades. At the beginning of the year, the US economy was feared to turn negative, but now the forecast is for it to remain moderately positive for 2022. All in all, it’s a mottled pattern at best.
In a CNN poll, more than half said they believe the economy was in a recession. In fact, we are hardly in a recession by any standards.
Democrats are frustrated. This is because the government of the Democratic Party of Japan must have implemented important policies to help people economically, from large-scale infrastructure and local industrial investments to partial exemption from student loan repayments.
Last week, President Biden stressed that “Americans are starting to feel the benefits of the economy.”
But for many, inflation is offsetting wage growth, interest rates are rising, stocks and homes are falling, and many economists expect the US economy to go into recession next year. In other words, there is a basis for people’s anxiety about the future.
“Who is to blame for the inflation?”
Republicans have made the economy a major issue in the midterm elections, accusing the Biden administration of fueling inflation with a large fiscal stimulus and letting people suffer from soaring energy and energy prices. foodstuffs.
But there has been little debate as to what is responsible for the current inflation rate above 8% per annum. While it is true that funds that have been injected into the public’s pockets through fiscal support measures in response to the COVID-19 crisis are still driving demand, most economists believe that external factors such as supply-side shocks contributed to the recent rise in inflation. It is the main reason.
But for voters who criticize politicians in the face of rising prices for things like food and gasoline, the cause of the inflation may not matter much.
Major parts of the economy are historically strong.
The unemployment rate has averaged 3.6% since March, lower than before the 2018 Trump mid-term elections and the best since the 1966 semester. Until recently, wages for low-wage workers were increased faster than inflation and the number of jobs far exceeded the number of job seekers.
In a recent survey of members of the small business trading group Alignable, more than half cited rising borrowing costs as their top concern. Behind this is the rapid rate hike by the US Federal Reserve Board (FRB).
And in a recent Reuters / Ipsos poll, when asked if they had changed their behavior in response to inflation, such as cutting savings, canceling holidays or switching to cheaper brands, 80 percent replied, “This is all true.” t, “he replied.
But a third of respondents, both Democrats and Republicans, said they had postponed “buying a house, office or whatever” due to higher interest rates. 30-year mortgage rates have recently risen to an average of 7% for the first time in 20 years. This particularly affects young first-time homebuyers.
Politically, people may feel a great deal of uncertainty about the future. This uncertainty is probably at the root of the decline in consumer confidence despite the increase in household wealth.
In the period since the pandemic began – from the final year of the Trump presidency to the two years of Biden’s presidency – household wealth has increased by $ 32 trillion, or about 30%, the Fed data shows. that doubled among those in the lowest 50% of wealth levels.
But that growth has stalled over the past year and the optimism has almost faded now, with the mid-term elections approaching.
A Reuters / Ipsos poll found that 70% of Democrats and 77% of Republicans said their financial situation was neither better nor worse than it was a year ago.
John Leah, chief economist at Morning Consult, said the gap between what the economy is and how people feel about it is “very big,” but there is also a big gap between economic data and reality. . “Employment is growing strongly, gross domestic product (GDP) is growing, but there are red lights on everything,” he said.
(Howard Schneider reporter)