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Opinion
This week in Bidenomics: See ya! Rick Newman · Senior Columnist Sat, Nov 9, 2024, 10:00 AM 4 min read
Voters rendered definitive judgment on the Biden economy: It stinks.
Donald Trump’s decisive win over Kamala Harris in the presidential election confirms Americans’ disgust with a menu of things: Wokeism, big government, runaway migration, a chaotic world.
And inflation. Before the tally of the 2024 presidential election was final, it was clear the outcome might depend on whether voters felt comfortable that inflation was back under control or resentful at the bite it has taken out of their wallets during the last three years. Now we know. Inflation cooked the Democrats.
In exit polls, 22% of voters said inflation had caused them severe hardship and 53% cited moderate hardship. So 75% of voters felt harmed by inflation to some degree. That heavily influenced their vote. In a survey conducted after the election, Democratic research firm Blueprint found that the top reason voters did not choose Harris was inflation.
Harris and Biden had similar takes on the economy as they tried to persuade Americans to vote Democrat. They both touted record job growth and solid GDP gains under Biden while acknowledging there was more work to do. The unfinished job was getting the cost of rent, groceries, and other staples down.
There was measurable progress. The rate of inflation peaked at 9% in 2022 and has since fallen all the way back to 2.4%, which is close to normal. Food prices are now rising by a mere 1.3% year over year. Gas is a manageable $3.10 per gallon. Wages have been growing faster than prices for a year.
Turns out, it doesn’t matter. The inflation hit more than offset all the positives of the Biden economy, at least politically. To ordinary Americans, job growth and GDP are statistical cloud puffs. What’s tangible to them is the price of everyday necessities. Screw that up, and you’re out.
Biden (and Harris) still have 10 weeks left in office. But the economy is Trump’s now, and most voters are probably happy to kiss the Biden economy goodbye.
Stock markets jumped on the prospect of a second Trump term as investors await tax cuts, more deficit spending to juice the economy, and deregulation that could boost corporate profits. The bond market is more jittery, with yields up on concern that Trump’s tariff and deportation plans could be inflationary.
Trump will get a grace period on the economy, as most presidents do. Then he’ll have to prove that he will, in fact, do a better job on the economy than Biden and Harris. It’s a 50-50 proposition.
President Joe Biden blows a kiss to staff members of the White House on the day he delivers remarks on the 2024 election results and the upcoming presidential transition of power in the Rose Garden of the White House in Washington, Nov. 7, 2024. (REUTERS/Kevin Lamarque) · REUTERS / Reuters
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Job growth is already slowing, and the unemployment rate is up from a low of 3.4% in April 2023 to 4.1% now. Job openings are down from a peak of 12.2 million in March 2022 to 7.4 million now. The post-COVID boom, juiced by some $6 trillion in stimulus spending, is over. We may be approaching the late innings of the business cycle.
The 9% inflation under Biden came from a combination of COVID distortions, a surge in stimulus-funded spending, and Russia’s 2022 invasion of Ukraine. Trump is unlikely to face such an unusual confluence of inflationary forces. But his own policies could make thousands of everyday products more expensive through tariffs and the deportation of migrants who are an important source of cheap labor.
Housing affordability could be a particular vulnerability for Trump. There are at least two problems here: a lack of housing, especially lower-cost units, and mortgage rates that seem stuck above 7%. There’s nothing about Trump’s agenda that addresses either of those problems, and if his policies do turn out to be inflationary, rates could even go up, making housing affordability worse.
But it will be a while before voters can assess whether Trump is making their lives better or not. Biden will surely claim, with some justification, that he’s leaving Trump an economy that’s in move-in condition and only needs a little sprucing up. Trump will claim that everything’s a wreck until the day he takes office, when it will all dramatically improve. Voters will be carefully watching the price of groceries and gas, thankful that the Biden years are over as they wait for the Trump magic to happen.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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