Trump economy was better for the average American … period
President Biden is basing his campaign on two issues – Bidenomics and demonization of President Trump. Based on polling results, neither of these strategies is resonating well with the American people.
The White House and the leftwing media have entered the outer space of hyperbolic hysteria in trying to convince the public that Trump is a new Hitler who will assume dictatorial power and end all future elections. The speculation and accusations get increasingly ridiculous and outrageous as Trump’s polling numbers continue to rise – now showing him defeating Biden. Although there is sufficient evidence, those on the left do not seem to realize that it is their demonization of Trump – and the entire Republican Party – is fueling Trump’s high polling number.
Democrats are divided on the two-pronged strategy. Some argue that Biden should ignore Trump and focus on the economy, since it is almost always the voters’ number one issue when heading to the polls. Other Democrat strategists say nothing is important other than convincing voters that the 2024 presidential election is an existential choice between the American democracy and their fantastical fascist dictatorship.
Neither strategy appears to be working. Trump is the odds-on favorite to secure the GOP nomination and is leading Biden in most major polls. The end-of-the-Republic strategy is not working because it is just too outrageous … too unbelievable … too unreal. And it is too insulting to half the American public. It is political snake oil, and voters know it.
The economy is a different issue. According to Team Biden, we are living in one of the best economies ever. Everything is coming up roses. The only problem is “messaging,” so they claim – even though their message is being carried in the media in a daily basis. Still, Biden, Democrats, and the sycophantic media believe the people are not hearing their narratives enough. They just cannot admit to themselves that the folks back home have gotten the message, but do not believe it.
In view of all the messaging with regard to the economy, why do most folks think things are not going well? Why do they believe they were economically better off under Trump?
The answers to those questions are simple. Things are not going all that well for the average American. And people know they were better off under Trump. Since President Reagan asked voters in 1980 if there were better off then than after four years of President Carter, that question has become a traditional political litmus test.
Democrats take the position that the public is simply wrong — we the people are not informed properly. Essentially, they think we are stupid. In terms of answering the essential question, people say they are NOT better off today than they were four years ago. And do you know what? We are not.
People understand that Biden came to office at the end of the Covid Pandemic’s self-imposed recession. Folks remember the good economic times prior to the recession – during the Trump presidency. The stock market was soaring. The economy as measured by the Gross National Product was growing at a healthy rate. The interest rates on mortgages were at record lows. The price of housing was within the reach of many young buyers. Unemployment was at record lows – with minorities being the greatest benefactors. Wages were up and gas prices were down. Disposable income (purchasing power) was up – meaning more savings and less credit purchases. During the Trump Presidency – 2017 to 2020 – disposable income rose 10 percent.
Then the Pandemic hit, and the economy was shut down by government – not by the people. That is significant because there was a battle between progressive Democrats and conservative Republicans on the extent of the shutdown. The economies (the people) hit hardest lived in blue states, like California. Those who suffered less during the Pandemic lived in red states, like Florida. Simply put, Democrats shut things down to a greater degree and a longer period than did Republicans. Voters remember that when giving Trump and Republicans higher marks in handing the economy.
Prior to the Covid shutdown, unemployment under Trump had dropped to a 50 year low of 3.5 percent. The number soared to more than 15 percent during the Covid shutdown. It has now returned to 3.7 percent. Unemployment levels have returned to pre-Covid Trump levels.
Folks sitting around the kitchen table also understand that all the economic “gains” for which Biden and Democrats take credit are simply the economy automatically returning to pre-Covid levels. Most of that gain was inevitable – not a matter of policy. In fact, many economists believe Biden policies retarded the recovery and triggered higher inflation.
The stock market has continued to reach record highs – although the dollars gained have less value (purchasing power) because of inflation. The Gross National Product regained a positive but slow growth under Biden. But those are not what people consider as the all-important “kitchen table” issues. Those are not the issues that directly impact their lives on a day-to-day basis.
When voters talk about “the economy,” they are essentially talking about their disposable income. That is it. Biden can parade his economic gurus before the cameras to tell us how great the economy is doing in macro academic terms, but for we the people, it still comes down to … how much a person earns … how much Uncle Sam takes … and how much a person can purchase with what is left. That is the essence of personal budgeting. That is what people are thinking about when they go to the polls – or when they respond to pollsters.
So, what does the “kitchen table” economy look like. It is not as good as it was under Trump. Whether you like Trump or not, that is the simple fact. In fact, the peoples’ economy is a LOT worse than under Trump prior to the Pandemic.
The 500-pound economic gorilla in the room is … inflation. Under Trump, the Federal Reserve interest rates were close to zero. That meant very stable prices. Low mortgage rates. Credit card interest was as low as 13 percent – and companies were offering an interest-free 12 to 15 months if you signed up. Credit cards tied to specific services (like my auto repair shop) charged no interest if paid off in 12 months.
Inflation increases shelf label retail prices and all the costs credit costs. Interest rate increases impact on retail sales prices because the entire supply chain relies on borrowed money at every step.
Even worse, to rein in inflation, the Federal Reserve has only one tool. Increase interest rates to drive down employment and consumer spending. In the crazy world of economics, you must cut costs by driving up the interest rates that tend to increase costs. The Fed did that 11 times – and may still have more increases in the future.
The Fed’s interest rates kick off a chain reaction of interest rate increases. For example, the interest rate banks use to lend money to other banks in massive overnight transactions is between 5.25 and 5.5 percent – the highest in 22 years. Average folks may not be aware of that portion of the economy, but it impacts on what they ultimately pay in both credit and retail purchases.
In May of 2020 – the last year of the Trump presidency — the inflation rate was .01 percent. Under Biden it reached 8.5 percent in March of 2022. It is increasing at a slower pace today – roughly 3 percent — but that is still producing significant monthly increases on top of all those previous increases.
Mortgage rates have more than doubled. Under Trump, the mortgage rates were around 3.1 percent. They are running at 7 percent under Biden. Inflation and mortgage rates have increased the cost of housing. That has put house ownership beyond the reach of millions of young people and young families. And … it has also increased the cost of rental housing.
According to the Washington Post,** consumer confidence dropped to the lowest level ever in June of 2022. The report said that Americans seem “downright despondent when it comes to their finances.”
Consumer confidence is far lower than it was four years ago, and consumer spending is higher. That is a dynamic ignored in Biden’s economic narrative. He often cites consumer spending as an indication that the economy is strong and the people are benefiting. So why is consumer confidence down?
Biden does not consider HOW they are spending. To understand what people feel, you need to understand that savings are down. Inflation is forcing more and more people to spend every dollar they earn. People in that situation do not feel good about the economy.
Even worse. Much of the spending is credit based. Credit card purchases have soared under Bidenomics – with credit card interest jumping between 7 to 10 points, for 13 percent to the mid-20s. That means more folks are falling into the credit card trap in which they can hardly afford to pay off their interest charges each month. Again, people do not feel good about an economy that puts them in unsustainable debt.
Then there is the issue of gas prices. Not the per barrel costs that economists look at but the pump price. Under Trump, it was as low as $1.80 per gallon. Under Biden they rose to record highs of $5.00 per gallon. That is a $48 dollar difference per 15-gallon fill-up. Based on vehicle types and usage, many Americans were seeing an INCREASE in their monthly gasoline cost of $100 to $150 more than in the Trump era. And like interest rates, increasing gas prices add to the supply chain costs at every step.
Political consultant James Carville said “It’s the economy, stupid” to indicate what drives a person’s vote. But it is not the macro economy. I would paraphrase it by saying “It’s the family budget, stupid.”
For the wealthy class, the question of whether they are better off under Biden than under Trump is meaningless. They have sufficient income and resources to live large in either case. It is the vast majority of Americans who live off their income who are dissatisfied.
They are the folks telling pollsters that the economy was better under Trump – and that they trust Trump more than Biden on handling the economy. They are the voters telling pollsters that they are not happy with Bidenomics. They are not buying Biden’s narrative of good times because they are not living in them. The simple fact is that the general public was better off under Trump’s pre-Covid economy – and they know it.
So, there ‘tis.
** Most, but not all, of the numbers in this commentary were reported in the Washington Post.