The economy is the compass that guides American votes in the presidential and midterm elections, marking voter inclination and candidate victory.
So far, President Joe Biden has trusted that a robust job market is a strong hand for his re-election plans in 2024 and immediately into November, when control of Congress is at stake.
The unemployment rate in March was 3.6 percent, its lowest since the pandemic began and two-tenths lower than the previous month, the Federal Office for Labor Statistics (BLS) said.
However, not everything is rosy for the Democratic president. The day before, the Commerce Department announced that the economy had contracted for the first three months of the year.
Inflation-adjusted gross domestic product fell 0.4 percent in the first quarter, the first decline since the start of the Covid-19 pandemic and a sharp reversal from rapid growth of 1.7 percent in the last three months of 2021.
Pressure from President Biden to sell Americans his economic history has just gotten complicated, The Hill newspaper said.
It’s alarming because given failures in his government agenda, particularly in approving social programs and addressing phenomena like climate change, the economy tops the numbers Americans associate with their voice.
According to some polls, 79 percent of voters put the economy first, followed by health at 68 percent.
Democrats have already suffered in some 2021 elections, losing the governorship of Virginia and narrowly taking New Jersey, suggesting the so-called Blue Party is losing ground to its Republican or Red rivals.
However, the negative number masked evidence of a recovery that economists say remains fundamentally strong, the New York Times reported.
The decline – 1.4% on an annualized basis – was mainly due to the way inventories and trade are factored into the calculation, as well as lower public spending as Covid relief efforts are scaled back. Underlying demand measurements showed solid growth, the Times said.
Most importantly, consumer spending, the engine of the U.S. economy, grew 0.7 percent in the first quarter, despite rising gasoline prices and another wave of the SARS-CoV-2 disease cause, which is driving spending on restaurants, travel and… Travel restricted similar services in January.
“Consumer spending is the aircraft carrier in the middle of the ocean — it keeps walking,” said Jay Bryson, chief economist at Wells Fargo.
However, economists warn that resilience could be tested in the coming months as the fastest inflation in four decades takes its toll. Consumer prices rose at an annual rate of 7 percent in the first quarter and public income fell for the fourth straight quarter.
The Times noted in its assessment that the percentage of Americans who rank inflation as their household’s top financial concern hit a record high in a Gallup poll released Thursday. 46 percent rated their personal finances positively, compared to 57 percent a year ago.
The thing to keep in mind is that most households are no longer benefiting from rounds of direct federal aid for Covid-19.
Now we’ll have to wait and see how the population reacts to the fall in GDP, especially as recent polls show a growing number of voters are opposed to Biden’s economic management.