Commentary

Is the Economy Failing? Only if You Think So

August 18, 2022 7:00 am

How will voters view the economy in November when they cast a ballot? ( John McCosh/Georgia Recorder)

Filled up at the gas pump recently? Then you may have noticed the historically high prices have been dropping back down to seemingly more reasonable one. Gas in central Indiana, once topping out at $5.25, has fallen down to $3.88. The timing isn’t exactly great for travelers–coming just as school goes back to session and family vacation season ends. It is still a welcome change in an economy that has struggled to curtail costs on working Americans, much to the chagrin of the president and his policies.

President Joe Biden has faced regular criticism for the economy’s rising inflation (like gas prices, creeping up at a rate of historic highs) and the pressures of the housing market. Unemployment has been so low for so long that it hardly gets a headline, dipping to just 3.5% in July. The economic tradeoff, it would seem, is the increase in consumer prices that have forced even the less cautious to buy with a little more thought. July brought an increase of 8.5% to the CPI, cooler than June’s 40-year high at 9.1% but hardly a consolation for those pinching their nickels for what used to cost them pennies. (For a historical comparison, the year-over-year inflation for the last three decades averaged 2.3%.)

The longstanding concern over inflation, coupled with gas prices and the housing market, has marred Biden’s presidency as he rounds out the first half of his term. Sure, the federal reserve has hiked up interest rates (four times this year!) in an effort to assuage the impact but prices have risen so much they seem impossible to ignore. The issue could have devastating consequences for Democrats this November but such a blanket assumption would disregard several significant nuances in American politics.

Recession?

First, whether or not our country is coming up to a recession is almost a moot point. To technically qualify, we need to experience six months of economic downturn. The increased inflation rates and higher interest rates lead many to believe it is not “if” but “when.” Even with markers of economic downturn looming, the political impact could be negligible.  Political behavior does not rely solely on truths but rather framing and viewpoint. The objective reality is subservient to the subjective perception.  If you think things are going well, then they are going well. If you believe they aren’t then, for you at least, they are not.  

In economic voting, the importance of perception can be highlighted by whether one is assessing the overall country’s economic health or their own personal financial situation. Sociotropic voting relies on the view of the national economy while pocketbook voting focuses on one’s individual experience. Retrospective economic voting evaluates the work of the current administration.  As then-presidential candidate Ronald Reagan suggested to voters in a 1980 debate against incumbent Jimmy Carter: “Are you better off today than you were four years ago?” (The tagline resonated with many Americans and voters voiced their displeasure just one week later with a resounding “no.”)

All of these factors are then subject to prioritization. While researchers have determined that voters will punish an incumbent for the bad times and praise them for the good, the complexity of various issues and politics makes even that assessment challenging. Social issues may eclipse individual’s preference to vote based on the economy with the passage of Indiana’s controversial abortion legislation. And whether a voter places either the most prominent wedge issue of our generation or the most stressful economic times our nation has experienced in over a decade on top remains to be seen.  

One thing is for certain: voters respond to salient issues they feel are relevant and important in their lives. Voters should have no lack of motivation to turnout to the polls, however they cast their ballot, for the congressional midterms. 

James Carville once roared, “It’s the economy, stupid!” in an effective appeal to communicate the impact of macroeconomics to individual voters. With the rapid inflation that has marked 2022 so far, one could even be stupid and able to recognize the important of the economy. It is just a matter of if that is the deciding factor in their vote. 

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Laura Merrifield Wilson
Laura Merrifield Wilson

Laura Merrifield Wilson, PhD, is an Associate Professor of Political Science at the University of Indianapolis. She specializes in the study of political behavior, state and local government, and campaigns and elections. She earned her PhD, MA, and MPA from the University of Alabama and her MA and AB Honors from Ohio University. She is a regular political commentator and analyst.

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