Since rising to about $5 per gallon in June, gasoline prices have gone President Biden’s way. The drop in prices since then, around $3.80 per gallon, has avoided what appears to be a dangerous role for Biden and the Democrats now.
However, Biden’s party appears to be out of control of Congress in the Nov. 8 midterm elections. The Supreme Court’s decision on abortion protection in Roe v. Wade in June was seen as a game changer for Democrats who would increase the turnout of angry voters who want a Democratic Congress to challenge the recent justice. However, in recent weeks, abortion has been reduced to a ballot issue, replaced by the old, stupid economy.
A new analysis by Moody’s Analytics separates real disposable income and inflation-adjusted home values as the two economic indicators that best predict the fate of the incumbent party. the mid-term elections. Home values should be a democratic asset. Prices rose by 13% per year, while inflation was 8.2%, for a gain from inflation of around 5%. This could be good news for the authorities.
[Are you voting Republican because of the economy? Tell us why.]
But the twists and turns related to COVID are eroding the value of the hot house market for Democrats today. As demand for housing increases in 2020 and 2021, rising prices have become a headwind for sellers and owners. Buyers, however, faced sticker shock, and many prices. Now they are taking a hit as the Fed raises interest rates to fight inflation. Inflation and still high prices have fueled the financial crisis, with Oxford Economics’ home affordability index at its worst level since 2007, when it peaked. the last housing bubble. A troubled housing market confuses voters, not reassures them.
As for the real income, in some conditions, it is close to the lowest. Real income fell 4.5% year-on-year, according to government data. The quarterly average going back to the 1970s was a 3.1% gain. Therefore, it is a particular problem for consumers today. This chart tells the story:
To understand what’s happening with income, don’t forget the unprecedented ups and downs that occurred in 2020 and 2021, when workers flooded and then came back. Instead, note where real incomes have declined as the labor market has recovered. Personal incomes have fallen more than at any time in the last 60 years, including a period in the 1970s and early 1980s when prices were even higher than they are now. – life. Wages may catch up with inflation over time, but right now the average worker is lagging behind.
Here’s another way to look at the problem for Democrats. For the Yahoo Finance Bidenomics Report Card, we track real income and five other economic metrics under Biden, compared to previous presidents going back to Jimmy Carter in years 1970 at one point in his presidency. Biden gets high marks for job creation, but he gets the lowest mark of the eight presidents in average hourly work. Again, this is because inflation is higher than the increase in wages given, which erodes the purchasing power of the average worker.
High gas prices are not the biggest problem for Americans
Biden has been very focused on the price of gasoline, recently announced, for example, that the government will continue to release oil from the strategic reserve in December, to help lower the price. Biden’s approval ratings fell as gas prices rose to new highs earlier this year, then improved as gas prices eased.
But voters have far more economic concerns than gas prices, rightly so: Housing and food costs are a bigger part of the average family budget than gasoline. Food prices rose 13% year-on-year. House prices rose by 8%. Nominal income rose only 5%. Wages are not keeping up with inflation.
While voters have shown little concern about gas prices for several weeks, they are still worried about the overall economy. “Americans’ view of the nation’s economy remains overwhelmingly negative,” Pew Research said on October 20, with its latest poll showing that 82% of voters consider the economy poor or fair. Only 17% say the economy is good or good. Seventy-three percent say they are very concerned about food prices, slightly more than 69% who are very concerned about gas prices.
Gallup polls have shown that the economy is the most important issue for voters, by far, throughout the year. And there has been little change in inflation concerns, even as oil prices have fallen. In May and June, 18% of voters said that inflation was their main concern. In September it was 17%, which is hardly an improvement. The drop in gas prices has not convinced anyone that inflation in general is slowing down. The share that says abortion rights are the biggest issue, meanwhile, is just 4% — down from 8% in July.
It’s likely that there wasn’t much Biden could do for months to combat food inflation or other inflationary pressures that left voters disenchanted. The president’s tools are limited to begin with, and it is up to the Federal Reserve to deal with inflation through monetary policy. A Fed rate hike may do the job, eventually. But it will be too late to help Democrats retain power in 2022. In 2024, maybe.
Rick Newman is a senior reporter for the Yahoo Finance. Follow him on Twitter at @rickjnewman
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