Our most recent book is titled Divided We Stand: The 2020 Elections and American Politics. Among other things, it discusses the politics of economic policy. Objective indicators are doing great. Perceptions, not so much.
Right now, it looks more like a “Brahmin Left” vs. “Populist Right” election.
“Brahmin Left” is a term coined by economist Thomas Piketty and colleagues to characterize Western left parties increasingly bereft of working-class voters and increasingly dominated by highly educated voters and elites. The Brahmin left has evolved over many decades and certainly includes today’s Democratic Party.
As a Brahmin left party, the temptation is great for Democrats to lean into their emerging strengths and just hope for the best among working-class voters. That is the natural inclination of the elites and activists who now dominate the party.
And indeed there are a couple of potent issues Democrats are planning to run on that are dear to the hearts of their Brahmin left base: abortion rights and defending democracy (“Democracy is on the ballot”, etc.) While for sure these are good issues for the Democrats, especially for your college-educated next door neighbor who would sooner take a bath in hot coals than vote for Trump, it must be recognized that these issues are not as potent and overriding for working-class voters. They are less convinced—far less convinced—that a great analogy for America today is Weimar Germany, 1932. Their concerns are more mundane, connected to their everyday material concerns and relatively conservative values.
Economic indicators are generally looking positive. Roger Lowenstein writes at the NYT that this trend does not mean automatic political gain for Biden:
But voters aren’t economists. They often judge presidents on the basis of coincident economic performance. Jimmy Carter had to deal with serious inflation, and George H.W. Bush endured a recession; each was voted out. Mr. Bush’s successor Bill Clinton reaped the recovery; he got four more years.
Mr. Biden inherited a tough hand: an economy upset by Covid and supply chain disruptions. Yet he presided over a return to growth and dodged a much-predicted recession. (Touch wood.) Jobs came roaring back. Early last year, unemployment dipped below the prepandemic low of 3.5 percent under Mr. Trump, and it remains a still impressive 3.7 percent.
Wage inequality is also contracting under Mr. Biden. I would argue that voters care less about inequality than pundits do. What voters care most about is whether they are doing better.
And this is where Mr. Biden has fallen short. Inflation has snatched away the gains from even a very strong labor market. Over his first two years, as price hikes outran wages, real median household income fell 2.7 percent. The census has yet to report median income for 2023, but given that real wages were up about 1 percent through November, the cumulative change in household median income, adjusted for inflation, over Mr. Biden’s first three years is likely to be in the range of mildly negative to very mildly positive. In other words, in the all-important category of improving living standards, the country did not make progress.
This shows that jobs and output, while very important, are not the only economic indicators that matter. Inflation matters, too, because high inflation taxes away prosperity. This is one area in which I think the president, along with the Federal Reserve, does bear some responsibility. He was warned by voices in his own party — notably, Larry Summers — that his first budget package, enacted nearly a year after the Covid recession ended, was too big relative to the need. He went ahead, and inflation in 2022 soared to 8 percent, a 40-year high.