President Joe Biden began his quest for reelection as the US economy teeters on the brink of recession and voters still feel the pinch of inflation, putting a significant hurdle in his path to winning a second term.
(Bloomberg) — President Joe Biden began his quest for reelection as the US economy teeters on the brink of recession and voters still feel the pinch of inflation, putting a significant hurdle in his path to winning a second term.
The video message introducing Biden’s final campaign focused largely on themes of democracy and combating extremism – underscoring what the president’s team sees as their strongest advantage over the likely Republican nominee, former President Donald Trump.
But the approach to not tout Biden’s economic record – which has seen robust post-pandemic jobs growth – also underscores the risks ahead. Economists continue to forecast that inflation – and the Federal Reserve’s attempts to tame rising prices by hiking interest rates – will likely tilt the economy into a recession before the end of the year. That’s true even before accounting for the risk of a federal default if Biden is unable to broker a deal with House Republicans to raise the debt ceiling this summer.
The danger for the president is that these economic headwinds could blow his campaign off course. Former Presidents George H.W. Bush – whose campaign was derailed by a recession – and Jimmy Carter – whose administration was defined by stagflation – saw their reelection bids doomed by the economy.
Biden does have one undeniable advantage: he’s already beaten Trump. Democrats also outperformed expectations in the midterms – despite inflation woes – suggesting swing voters may be more concerned by Republican positions on abortion, guns and the war in Ukraine.
The president’s reelection bid launches as the most recent Bloomberg Economics analysis sees Fed tightening and the depletion of household savings tipping the economy into a downturn in the third quarter.
Biden is unlikely to get a lifeline from the GOP-controlled House, making cuts to federal programs more likely than new stimulus that could help counterbalance a recession.
And while Biden remains the de facto choice of Democrats — thanks to his incumbency and a lack of credible competition for the party’s nomination — polls show voters across party lines remain reluctant to rally behind a president who would be 86 years old at the end of a second term.
On the economy, banks were raising lending standards even before the recent collapse of Silicon Valley Bank and Signature Bank, which is likely to restrict expansion and inventory-building plans. An additional hike by the Fed would also make borrowing more expensive, with price-sensitive consumers squeezing margins. And the economy faces a slew of risk factors, including the possibility that production cuts by OPEC+ push oil prices higher.
“Obviously, all of this is just incredibly unpredictable,” said Jason Furman, the former chair of the Council of Economic Advisers under former President Barack Obama. “But the one thing I think is the least likely economic outcome is a soft landing.”
The White House has dismissed the concerns, saying Biden’s economic programs will fuel economic growth – and cut costs on goods like medicine – as they take effect.
“Recent economic indicators are not consistent with a recession or even a pre-recession,” press secretary Karine-Jean Pierre said earlier this month.
Aides argue jobs and economic growth seen during Biden’s first term offer a favorable comparison to Trump. And it’s possible that a mild recession that tamps down interest rates without substantial job losses could ultimately benefit the president, addressing Americans’ frustrations over rising prices.
“I think there’s more downside than upside, because there’s all sorts of peril in the economy that we’re worried about going forward,” Furman said. “But I do think it’s not all downside and that people hate inflation, and inflation is likely to come down and that’s weighed on people more than jobs has been a positive.”
It’s not clear how an economic worst-case-scenario – breaching the debt ceiling – would play politically. House Speaker Kevin McCarthy has sought trillions in spending cuts that Democrats oppose in exchange for avoiding default, while Biden so far has refused negotiations on the topic. But Biden and his aides are banking on voters punishing Congress if a default occurs, bolstering Democrats’ argument that the GOP is in the grip of Trump-loyal extremists.
The contrast with the former president is in many ways a central predicate of Biden’s case. Trump, 76, is just four years younger than Biden, and polls show voters similarly disenchanted with his candidacy. While seven in 10 voters said Biden shouldn’t seek office again, six in 10 say the same about Trump, according to an NBC News survey released Sunday.
There’s risk for Biden – other Republican candidates, like Florida Governor Ron DeSantis – win head-to-head matchups and don’t have the same liabilities of Trump. But Biden continues to hold an advantage over Trump after besting him four years ago. While 38% say they have a positive view of the incumbent, just 34% say the same of Trump, who is also disliked by more voters.
As it relates to the economy swaying voters, Democratic pollster Celinda Lake concedes that Republicans currently have the advantage, but that Democrats have to message them to a “tie.”
“People are very upset about the economy, but it is starting to break through a little what the president is doing. Americans are starting to be aware of things like the infrastructure projects. Democrats just have to relentlessly fight to get out the economic message,” Lake said.
–With assistance from Jordan Fabian and Nancy Cook.
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