Darker economic outlook spells trouble for Democrats in 2022

President Biden and Democrats face serious political headwinds fueled by high inflation, a volatile stock market and growing fears of recession as they try to defend their majorities in the House and Senate.

The president banked on a massive economic recovery that won his party another run in Congress two years ago when he launched his ambitious recovery plan, pouring in trillions of dollars to support the recovering labor market and struggling households.

In late summer, after enduring the scourge of rising prices and a strained supply chain, the president and his party saw a series of economic and political victories.

Gas prices fell and Democrats were able to come together and pass a comprehensive climate and health care bill. The U.S. has also had the strongest hiring numbers in decades, adding more than 10 million jobs since Biden took office and 3.8 million this year alone.

But the US economic outlook is once again darkening.

The latest inflation report could cost the president and his party dearly, while deepening the risks facing the US economy.

Consumer prices rose 8.2 percent over the past 12 months and 0.4 percent last month alone, according to consumer price index data released Thursday by the Labor Department.

While annual inflation has fallen steadily since June, rising prices for food, shelter, health care and travel are weighing on household budgets.

Retail sales also flattened in September, according to data released Friday by the Census Bureau, as more Americans scale back their spending amid rapid price growth.

“Inflation is the single most important factor that determines how much shoppers are willing to spend. Households tap savings, access credit and reduce their savings contributions as they face higher prices head-on,” explained Jack Kleinhenz, chief economist for the National Retail Federation , in a Friday analysis.

The economic squeeze is also straining voters’ faith in Biden and the Democrats’ ability to lead the United States out of the quagmire.

Only 28 percent of Americans believe that the United States is heading in the right direction, according to a poll conducted by The Economist and YouGov earlier this week.

The survey of 1,500 US citizens found that 41 percent of Democrats, 53 percent of independents and 78 percent of Republicans believe the United States is already in a recession, even though the economy has added 420,000 every month on average this year.

“You go to the grocery store and everything is more expensive and often more expensive than the last time you were there. It hits families’ budgets, it hits their psyche, and it’s number one in the campaign,” Doug Heye, a Republican strategist and former spokesman for the Republican National Committee, said in a Thursday interview.

“You pay more or you make choices not to spend that money. And that’s every day. Nothing competes with that,” he added.

Republicans have blamed Biden and Democrats for the rapid inflation faced by American households since prices began rising last summer. GOP lawmakers say the $1.9 trillion U.S. bailout — the sweeping relief bill signed by Biden in March 2021 — is the primary reason Americans are suffering from higher prices.

“Wages are down, prices are up, and Democrats have nobody to blame but themselves. Americans know that a Republican vote in November is a vote for lower prices and a strong economy,” said Republican National Committee Chairwoman Ronna McDaniel , in a Thursday statement.

While most economists believe Biden’s stimulus bill spurred higher inflation, it is far from the only factor driving prices higher. Inflation has been high around the world, and Democrats are eager to keep the US economy strong against global counterparts.

Biden and Democratic lawmakers have sought to highlight the rapid recovery in the labor market and the return to the pre-pandemic unemployment rate of 3.5 percent, then a 51-year low. Democrats are also trying to rally support for the recently passed Inflation Reduction Act, a bill aimed at lowering prescription, health care and energy prices.

“The challenge for candidates will be to find the one, two or three things that resonate most with voters, to indicate their impact, but also remind their voters of the comparison with what they are up against in those specific areas and districts,” said Antjuan Seawright, a Democratic strategist, in an interview Thursday.

“Over the next few days, these people need to be unapologetic about what has been done and in historic fashion,” Seawright said.

Unfortunately for Democrats, inflation has resonated more with voters than the party’s attempts to mitigate it.

Fifty-one percent of respondents to the Economist-YouGov survey said inflation is the most important factor for them when assessing the strength of the economy. Only 15 percent said unemployment was the most important way they rated the economy.

And only 12 percent of Democrats, 4 percent of independents and 4 percent of Republicans think unemployment is more important than inflation.

Seawright said it’s important for Democrats to highlight their efforts to bring down prices through the Inflation Reduction Act, Biden’s efforts to normalize supply chains and the administration’s efforts to expand energy production. He also said that a lack of a Republican plan to fight inflation should give Democrats a good result in winning over voters to their camps.

“If you compare that to what the Republicans have tried to deny and what they refused to offer in the solution, hopefully it would be a no brainer for the voters,” he said.

But Heye countered that Republicans don’t need a fix to win away from worries about inflation and the economy. He compared the upcoming election to the 2010 midterms, when Republicans took control of the House and Senate on a promise to repeal — but not replace — the Affordable Care Act.

“At the end of the day in politics you tend to be rewarded more for identifying problems than offering solutions, and given the level of anger that voters have about this, that can be a winning strategy,” he said.

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