WASHINGTON — In launching his reelection campaign Tuesday, President Biden said the country remains in a “battle for the soul of America.” But whether he gets another four years to win that fight will depend in great part on the heartbeat of the economy.
The nation’s economic health historically has been the pivotal factor in determining whether an incumbent president gets a second term, and Biden faces arguably his greatest challenge on that front.
Despite record job creation, a historically low unemployment rate, and solid growth, perceptions of Biden’s handling of the economy may come down to a single number that is of outsized importance to American families: inflation, which continues to run well above normal. And although the pace of price growth is trending down from last year’s four-decade high, it remains elevated and the continued effort to tame it threatens to push the nation into a recession in an election year.
Republicans have blamed Biden for fast-rising prices of gas, groceries, rents, and other costs since he took office even though inflation is high across the world largely because of pandemic-related supply chain problems and the war in Ukraine. Inflation has been called “the cruelest tax” because it hits people every day. Since prices began shooting up in the spring of 2021, polls consistently have put Biden’s approval rating on the economy well below his overall anemic job approval.
“The number one thing that dictates the president’s approval rating is the economic numbers,” said Republican strategist Alex Conant. “If the economy is not healthy . . . it’s very difficult for a president to win reelection.”
Biden and his supporters clearly understand how important the economy is to winning another term.
Even before he released his announcement video Tuesday, Biden had been traveling the country in recent months touting his economic achievements. Those include more than 12 million new jobs created under his watch, a bipartisan infrastructure law that is funding thousands of projects nationwide, and legislation that reduces the cost of prescription drugs.
“Our economic plan is working. We now have to finish the job and there’s more to do,” Biden declared in a speech in Washington on Tuesday to a conference of North America’s Building Trades Unions. “Through our policies, the pace of inflation has been coming down now for nine months in a row with more to go.”
Republicans see high inflation as a major liability for the president, blaming what they call “Bidenflation” solely on increased government spending during his administration. The economy was the first thing former president Donald Trump focused on in a written statement before Biden’s reelection announcement, ahead of immigration, crime, and foreign policy.
“Thanks to Joe Biden’s socialist spending calamity, American families are being decimated by the worst inflation in half a century,” said Trump, the polling front-runner for the 2024 Republican nomination. Ronna McDaniel, chair of the Republican National Committee, warned that “inflation will continue to skyrocket” among other problems if Biden is reelected.
The annual inflation rate as measured by the consumer price index hit 9.1 percent last June, the highest since 1981, as increased COVID rescue spending combined with snarled global supply chains and a sharp increase in oil prices after Russia invaded Ukraine. The independent Federal Reserve has been aggressively raising interest rates to try to return price growth to normal levels.
That effort has been working — the annual consumer price index was down to 5 percent last month. But as the higher rates slow economic growth, they risk triggering a recession that would force people out of work during the presidential campaign.
A mild recession this year might not badly damage Biden’s reelection chances if the economy clearly is growing again and hiring picks up in the months before the election, analysts said. But a recession that lingers well into next year or doesn’t begin until then could be a major problem for Biden, said Allan Lichtman, a political historian at American University who has studied presidential campaigns.
“As Herbert Hoover once said, ’The president gets the credit for the sunshine and the blame for the rain,’ ‘‘ Lichtman said.
Lichtman said he has developed a system of 13 metrics that has correctly predicted the winner of every presidential election since 1984. Short-term and long-term economic performance by the party in power are two of them. And history has shown the negative impact a recession can have on a president’s reelection.
George H.W. Bush lost in 1992 as people were still struggling with the effects of a 1990-1991 recession despite his approval rating hitting 89 percent at the end of the Persian Gulf War. Conversely, an improving economy after a deep recession helped deliver a win for Ronald Reagan in 1984.
“For two or three years, Reagan’s approval ratings were abysmal . . . but luckily everything turned up in the election year,” Lichtman said.
Reagan’s approval rating hit a low of 35 percent in early 1983, according to the Gallup polling firm. He went on to win a landslide reelection as economic growth boomed. Biden’s approval rating was 40 percent last month, according to Gallup. His rating on the economy was 32 percent in the same poll, near the low point of his tenure.
Former labor secretary Martin J. Walsh, a close friend of Biden’s, thinks the president has delivered on the economy.
“Obviously there are issues in front of us like inflation that we still have to deal with and bring down,” said the former Boston mayor, who recently resigned from Biden’s Cabinet and attended the Tuesday speech after receiving an award from the building trades organization. “But when you talk about the job creation, getting people back to work, building the infrastructure of America . . . those are things that may not be front and center in everyone’s mind, but that’s what keeps America moving.”
Democratic strategist Simon Rosenberg said it’s good that Biden has begun his campaign so he can address the economic attacks.
“He’s got to get his numbers up on the economy. He’s got to get his job approval numbers up. But those are doable things . . . particularly if you put a billion dollars in TV advertising behind it,” said Rosenberg, who correctly predicted that high inflation would not lead to a Republican wave in last year’s midterm elections because voters would reject the party’s extremism.
“When we tell our story about the economy, we know we can improve our standing,” he said. “I’d rather be us than them.”
Biden has already begun trying to make his case on the economy, as well as attacking Republicans on the issue. On Tuesday, he contrasted his “blue collar blueprint for rebuilding America” with what he called the Republican “trickle down” economic strategy focused on lower taxes for the wealthy.
“Folks, trickle down economics doesn’t work,” Biden told the building trades group. “We have a very different plan for the economy. . . . We’re turning things around and we’re doing it in a big way.”
Conant acknowledged that the economy is in pretty good shape right now and inflation is trending in the right direction. But voters will make decisions based on their individual circumstances. And Biden will get the blame if people feel they are worse off regardless of the economic data, Conant said.
“The old joke is, a recession is when your neighbor loses a job and a depression is when you lose your job. . . . High gas prices, inflation, rising unemployment all hit consumers very hard and become huge political liabilities,” Conant said. “Voters are going to punish the White House if they feel that the economic situation is hurting them.”