The iconic political consultant James Carville, known more for witticisms than wins, famously coined the truism “It’s the economy stupid.” It is as valid today as it was when he posted the phrase on the Clinton Campaign headquarters wall in 1992.
Virtually every poll taken in the 2024 presidential campaign has found the economy and/or inflation to be voters’ top concern. By lopsided margins voters view Donald Trump as more capable of dealing with the economy than Kamala Harris. This appears to confound the Biden-Harris cabal, the legacy news media, and many economists. The reason for their puzzlement is simple: they look at government statistics, voters look at their household budget.
The classic definition of a recession is two consecutive quarters of negative Gross Domestic Product or GDP numbers. By that metric we most certainly are not in a recession as second quarter 2024 GDP has been estimated at 3.0 percent, first quarter 2024 GDP has been revised to 1.4 percent.
Government statistics, however, are shifting sands. In the 12 months that ended in March the U.S. Department of Labor overestimated by 818,000 the number of jobs created. While minor revisions in such statics are normal given in the fullness of time more data is available, the sheer size of the overestimation is astounding.
Back in the mid-1990s when the Lincoln Institute of Public Opinion Research was a start-up we were advised by the famed pollster Al Sindlinger. Mr. Sindlinger conduced daily polling to directly gauge public opinion on the state of the economy. He then used the data to advise his many business clients.
The reason Al Sindlinger polled people directly is that he did not trust government statistics. He believed the data was subject to both interpretation and manipulation by bureaucrats more concerned with protecting their fiefdoms than in giving Americans an accurate picture of what was happening in the economy. If anything, in the decades since, the power of the deep state has grown stronger.
The same government that vastly overstated job growth is also telling us the inflation rate for July was 2.9%. That has the Left cheering and claiming Biden-Harris policies are responsible for getting the inflation rate under control – this after it was their policies that triggered run-away inflation in the first place.
Inflation is caused by too much money chasing too few goods and services. The trillions of dollars Biden-Harris added to the national debt in the first two years of their administration heaped atop trillions spent to combat the COVID-19 pandemic were financed by the Federal Reserve increasing the money supply – which is government speak for printing money.
The money supply outpaced growth in the Gross Domestic Product resulting in cumulative inflation during the Biden-Harris era topping 20 percent. Inflation has also exceeded wage growth so at the kitchen table American families are struggling to buy groceries, pay the mortgage, put gas in the car and to pay for all the necessities of everyday life.
Even if you are inclined to believe government statistics showing an improving economy the fact is America is in the midst of a kitchen table recession. The 2.9 percent inflation rate in July is added on top of the inflated costs of the past three years providing not relief, but more pain. That is why voters are not buying the economic “joy” being spouted by the administration and the media.
To combat inflation the Federal Reserve raised the federal funds rate to 5.25-5.50 percent. Although not an all-time high, rates are significantly higher than in recent years raising the cost of buying a new home or a new car and pushing such purchases out of reach of many consumers. This has added to the economic malaise being felt at that kitchen table.
It now appears the Fed will buy into government statists showing inflation declining and has signaled a pre-election rate cut later this month. This raises questions as to whether the rate cut is indeed based on sound economic data or is it interference in the presidential election designed to aid the Harris campaign?
Part of the reason inflation has been declining is that for the past year and a half a deadlocked congress has slowed the profligate spending that was the hallmark of the first two years of the Biden administration. If either Harris or Trump ramp up spending in future years the inflation genie will again pop out of the bottle.
The bottom line is a recession is in the eyes of the beholder and right now many American families are struggling due to the cumulative inflation of the Biden-Harris years. And that is why the economy and inflation remain a top voter concern.
(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal and American Radio Journal. His e-mail address is [email protected].)
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