Former Clinton campaign manager, James Carville, famously reminded his staff, “It’s the economy, stupid.”

That’s still largely true. But when it comes to politics and elections, it’s more about perceptions and feelings about the economy than its actual state. Facts matter, of course. But people vote on emotions, and politicians have mastered the art of playing to them.

There is much good to say about the current state of the economy, especially when compared to what President Biden inherited in January 2021. GDP and employment are rising — the June report of 209,000 new jobs is less than the preceding month, but still very positive — and unemployment is at historic lows at 3.6 percent. Even the average hourly wage has increased by .4 percent in June alone — heading in the right direction. The much anticipated recession resulting from increasing interest rates has not occurred. And if it does, it may well be minor, especially with the increased employment resulting from the long-awaited bi-partisan — sort of, anyway, most Republicans opposed it — infrastructure bill passed by the Biden Administration.

The remaining fly in the ointment is inflation, but there is even good news on that front. The current report of three percent is far below the plus nine percent of a year ago. The possibility of a “soft landing,” reduced inflation without a recession, is good news for financial markets heading higher.

A remaining serious economic issue is the obscene maldistribution of income and wealth that has been getting worse since the 1980s. This longstanding problem, a matter of policy choices, is expected to stay with us as the political class is unwilling, or politically unable, to seriously address it.

Encouraging facts about the economy do not necessarily translate into what counts politically, that is, how voters feel about the economy. Official data on declining inflation is meaningless to shoppers if they are still feel that they are paying too much, i.e., more than previously, for some goods.

Similarly, low unemployment numbers are meaningless to a family struggling to pay bills with a low wage job, whether or not inflation is declining. Increasing employment associated with new infrastructure projects is welcomed, even by politicians who voted against the bill that enabled these projects. But the multiplier effects from these projects take time to be realized.

So do these improved economic numbers compared to the waning days of the Trump administration bode well for President Biden?

Not necessarily, as politicians cherry pick and distort facts while playing upon emotions. The resentment of even a declining rate of inflation provides plenty of grist for interpreting facts in ways that favor challengers to the Biden administration. Since inflation is under Biden’s watch, “it must be Biden’s fault,” they insist. The fact that the last of several COVID-19 relief bills was passed under his administration with no Republican support gives Republicans grist to falsely insist that “Biden is totally responsible for inflation.”

But that’s how the political game is played, and that’s normal political strategy.

President Biden took over in January of 2021 as we were beginning to come out of the Pandemic. As the economy improved along with employment, people satisfied their pent up demand for goods, and, especially, services including travel and restaurants. Supply was restricted due to a combination of factors including supply chain disruptions, a declining workforce as Baby Boomers reach retirement age, and hesitation of some to get back into the work force — a combination of lingering fear of disease, lack of access to child care, and reliance on savings accumulated during the Pandemic.

Accumulated savings made possible under the COVID-19 relief bills, especially the last one, undoubtedly get a disproportionate share of the blame for a shortage of workers. Let’s recall that during the Pandemic the initial relief bills were seen by both Democrats and Republicans as necessary to assist families and businesses, and to stabilize the macroeconomy. We can give Trump credit for being pragmatic enough to recognize this need, and to sign the initial COVID-19 relief bills. But Trump and the Republicans took a 180 degree pivot and opposed the Biden relief bill, now blaming it for the inflation.

Even if that last relief bill appears to some to have been more generous than necessary, the seeds of inflation occurred much earlier, including the Trump administration’s failure to recognize the Pandemic for what it was, and to get on top of it. 

The fact is that inflation was, and is, a world-wide phenomenon. But as Biden is the president, he gets the blame for all of it, and it falls on his desk to “do something.” This, even if inflation is declining more rapidly in the U.S. than in many other countries.

Republicans urge that Biden should deregulate the oil industry and increase drilling. But any marginal increase in oil production on ecologically fragile lands would have miniscule effect on oil prices that are determined on the world market. It makes a tempting talking point to blame environmental restrictions as a major contributor to inflation — “totally Biden’s fault, of course.”

The high cost of pharmaceuticals is a major problem for seniors. Biden’s recent bill addressing inflation included the concrete step of reducing insulin costs for Medicare recipients. Republicans unanimously opposed it, and still oppose reducing insulin costs for all users. Republicans have long opposed the U.S. government having the authority to negotiate with Big Pharma for drug prices, even as they accuse Democrats of “doing nothing.”

Will the improving economy help Democrats in the 2024 election? Polls currently indicate that a majority of respondents disapprove of Biden’s handling of the economy. According to polling data, many believe that Trump would handle the economy better than Biden — doesn’t seem to matter that the public debt was increased by some six trillion dollars under Trump, and that he bears much of the responsibility for economic problems due to his denial of existence of the Pandemic, resulting economic disruptions, and the following inflation.

So yes, as Carville reminded his staff, “It’s about the economy,” and facts matter. But with improving economic numbers, we can expect Republicans to rely increasingly on the culture wars to play on voters’ emotions.  That could be a two-way street.

— John Waelti of Monroe, a retired professor of economics, can be reached at jjwaelti1@tds.net. His column appears monthly in the Monroe Times.