The economy won’t save Biden

President Biden needs a big boost to win in 2024; the economy won’t be it. Despite the stock market’s recent euphoria over coming Federal Reserve rate cuts, this will not have the political impact many may imagine. Even if these cuts come, there simply will not be time to undo the damage that Biden has already incurred with America’s economy.

Biden is in deep political trouble. 

He is in trouble generally, as the Real Clear Politics national polling averages show. His job approval is just 40.5 percent (versus 55.9 percent disapproval), he trails Trump 44.5 percent to 46.8 percent in head-to-head polls and his favorability is lowest of all — just 39.2 percent (versus 55.3 percent unfavorable).

And he is in trouble specifically on the economy. A recent Gallup poll showed Biden with just a 32 percent approval rating on the economy, versus a staggering 67 percent who disapproved. Among crucial independent voters, Biden’s approval rating on the economy was just 25 percent — even Democrats gave Biden just a 60 percent economic approval rating, his lowest on the five specific issues that Gallup polled. The latest Gallup poll showed four out of five respondents rated the economy fair (33 percent) or poor (45 percent), with only three percent rating it excellent and just 19 percent calling it good. What’s more, 68 percent said the economy is getting worse.

Down so deep on the economy, it is natural to look to see if the economy could also bring Biden back — particularly after the Federal Reserve recently surprised markets with its intention to cut interest rates three times next year. 

After all, nothing plays politically like the economy. Other than peace, it is the political universal. The economy affects everyone, and it affects everyone where they are most sensitive: their wallets. Few people benefit from a bad economy, and few forgive a bad one. It is therefore not surprising that the last incumbent presidents to lose reelection – Trump (COVID-19), Bush I (recession), Carter (recession), Ford (inflation) and Hoover (the Great Depression) – have also had bad economies associated with their first terms. 

So, what does the economy hold for Biden? While the Fed rate cuts may be good news for the stock markets, they do not necessarily bode well for Biden. 

Consider what the Fed wants to see before it begins making rate cuts. Most importantly, it wants to see an end to the high inflation that has coincided with Biden’s time in office. The latest Bureau of Labor Statistics inflation data are better than they had been, but they are still not at the 2 percent level that the Fed is looking for. The latest data showed November’s CPI-U (Consumer Price Index For All Urban Consumers) increasing 3.1 percent over the last year. The core inflation rate (excluding food and energy) increased 4 percent over the same period. Only Friday’s personal consumption expenditure (PCE) results showed the first signs that inflation may finally be reaching what the Fed wants to see. 

All told, inflation results are still mixed. Even if all the variables were where the Fed wanted them to be, these would still be just one-time readings — too short to warrant the Fed cutting rates. Inflation has proven stubbornly persistent over the last three years; the Fed is not going to begin cutting rates before it sees inflation where it deems acceptable and for sufficient time to prove it is real.  

When these rate cuts come, they will come with a slowing economy. According to the Congressional Budget Office’s (CBO) latest view of the economy, the expectation is that real GDP growth in 2024 will be just 1.5 percent, substantially below its estimate of 2.5 percent for 2023 — roughly the rate that has helped give Biden such dismal ratings on the economy today. The CBO also projects unemployment rising from 2023 Q4’s estimated rate of 3.9 percent to 4.4 percent in 2024 Q4.

Delays in lowering interest rates, slowing economic growth and rising unemployment are not good political variables — especially with just over 10 months to go before next November’s elections. 

What they mean to voters is that they will continue to live between the squeeze of higher than acceptable inflation and comparatively high interest rates — increasing their costs of buying (goods) and their costs of borrowing (mortgages and credit card costs). To make this squeeze even tighter, these are the same voters who have already been dipping heavily into their pandemic savings to keep the economy going. That savings hoard is now largely depleted.

Two clocks will be ticking in 2024: one is on November’s election; the other is on voters’ patience. Even if the Fed cuts rates, it will take time before it does, and it will then take time before any economic impact is felt. With each passing month, voters will forge an ever more irreversible verdict on Biden and his economy. It is already bad; it could get worse before it gets better. 

And Biden is particularly implicated by a connect-the-dots pattern that ties him to this economy: high inflation coincided with his high spending, deficits and debt; high interest rates then followed.

So, while presidents are historically dependent on the economy, Biden is particularly so. From what we see of the public’s perception of Biden’s economic record and estimators’ projection of next year’s economy, things do not look to improve — at least not any time soon. Politically, the economy is not going to save Biden, but it may well be what does him in.

J.T. Young was a professional staffer in the House and Senate from 1987-2000, served in the Department of Treasury and Office of Management and Budget from 2001-2004, and was director of government relations for a Fortune 20 company from 2004-2023.