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It’s already too late for Biden’s economy to save Democrats in the 2022 midterms

Experts see inflation cooling and unemployment dropping next year, but history suggests Republicans will still take control of the House — at least. ...

Biden economy speech Cleveland Ohio
U.S. President Joe Biden delivers remarks on the economy during a visit to Cuyahoga Community College in Cleveland, Ohio, U.S., May 27, 2021.

  • The economy is set to boom in 2022, but it'll be too late to help Democrats in the midterms.
  • History shows parties in power typically lose seats in the House, even if the economy is thriving.
  • Once Americans endure high inflation and unemployment, "it often takes a full two years for voters to notice" when the country heals, one expert said.

The forecasts are pouring in, and they predict Biden will lead the US to a even stronger economy than the one in place before COVID wrecked it.

Too bad that won't help his party in the upcoming 2022 midterms, not if all recent political history is any indication.

The biggest factors currently suppressing a booming Biden economy are expected to fade in a matter of months. The Delta wave appears to be a speed bump for the recovery, not the major disruption many feared. The red-hot inflation weighing on Americans could cool "by the second or third quarter" of 2022, Federal Reserve Chair Jerome Powell said earlier in November. Economists see strong job growth lasting into the new year. And the supply-chain crisis seems to have already peaked, with rates for overseas shipping now falling for eight weeks straight.

Biden's approval rating is in the tank despite the temporary nature of these problems, and it's threatening to drag down Democratic candidates across the country. Americans' confidence in the economy is the lowest that it's been since the depths of the Great Recession. Astoundingly, they feel worse now than they did during the depths of lockdown in March and April 2020. 

For the public to regain faith in Democrats' handling of the recovery, improvements need to come fast. The Biden administration is pouring its hopes into the new infrastructure law and the Build Back Better Act to diminish inflation. But many of their provisions will take years to implement and will do little to alleviate inflation in the short term.

"The BBB and infrastructure bill are both great long-term for the resilience of the economy and then investments in productivity," Rep. Don Beyer of Virginia, a member of the tax-writing House Ways and Means panel, told Insider. "But in the short run there really is a shortage of tools for a government, whether it's a president or a Congress, to go fix supply chain problems."

"The best thing we can do is explain why inflation is where it is," Beyer said. "And have reasonable expectations or about when it may start to taper."

But voters don't tend to demonstrate patience with rising prices eating into their paychecks. If they'd wait a little longer, they'd see a starkly different economy, according to Jefferies analysts led by Aneta Markowska. The bank sees inflation cooling to 2.5%, less than half the annual rate seen in October. Unemployment will dip to a record-low 3%, and the supply-chain crisis will abate. Gross domestic product will climb at an annual pace of 5.1% through the year, just slightly slowing from the stimulus-fueled surge of 5.5% in 2021. 

By all measures, Jefferies sees a boom on the horizon. Yet voters' past behavior suggests they'll ignore it the same way they're shrugging off the recovery taking place today. 

Precedent favors Republicans in 2022 — even if the US is thriving

History suggests Democrats' chances at a midterms rebound have already gone up in smoke. Insider analysis shows little correlation between a strong economy and a party's ability to maintain control of the government.

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In all midterm elections since 1950 barring two, the president's party lost seats in the House. Years when unemployment was historically high saw some of the largest swings in House control. High inflation and weak GDP growth also did little to aid parties in power.

The two years where the leading party won seats — 1998 and 2002 — were also periods of fairly strong economic performance. Otherwise, there's little sign that a booming economy leads to midterm-season success. 

There's almost no statistical relationship between economic indicators and midterm election outcomes. For example, the chart below compares postwar midterms against the unemployment rate in the third quarter of the election year. Note that there's only a very weak relationship between the two. Using a standard measure of the statistical relationship between the two variables, we can say that only about 4% of midterm election outcomes can be explained by the variation in the summer election-year unemployment rate.

Voters, it seems, can't be bothered about the economy while they're at the ballot box.

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Brian Riedl, a budget expert at the right-leaning Manhattan Institute, argued it was "heavily doubtful" Biden would get credit for the improving economy next year.

"When people become conditioned to recession, unemployment, and inflation, it often takes a full two years for voters to notice it has fully ended," he told Insider.

"You could have the inflation rate fall to zero tomorrow, and people two years from now will still be complaining about inflation," he said.

With price growth rising to the top of voters' concerns, Republicans are turning up the heat on Biden and his handling of the economy. Soaring prices are handing the party the perfect political weapon to hammer Democrats on the campaign trail. And recent surveys show Americans already favor Republicans to handle the economy.

In the meantime, Republicans sound increasingly ecstatic about the Biden economy they're running against. Elevated inflation is a "gold mine" for the GOP, Sen. Rick Scott of Florida told The Wall Street Journal. Even if economic data shows a strong recovery under Biden, the combination of historical voting patterns and the delayed timetable for Biden's agenda really taking effect could leave voters in a punishing mood next November.

Read the original article on Business Insider

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