President Joe Biden’s top economic aide says rising wages and easing inflation will help the bottom line for American households, potentially easing the disconnect between a robust economy and voter angst weighing on his re-election bid.
Lael Brainard, the former Federal Reserve vice chair who now leads Biden’s National Economic Council, outlined the case for a rebound in sentiment in a memo Tuesday while saying Biden’s top focus is on costs.
Growth is strong, inflation has slowed and the jobless rate remains low, Brainard wrote in the memo, a copy of which was provided to Bloomberg News. “But many Americans continue to face challenges, and there is more work to do to lower costs for American families, which is the President’s top economic priority.”
Brainard’s memo—essentially a list of glass-half-full indicators that counter gloom about inflation—comes as recent data show price growth trending downward but still stubbornly high, and ahead of a Federal Reserve decision Wednesday that could offer clues on whether the bank is done hiking and if it’s hinting at cuts in 2024.
Perceptions of the economic recovery have confounded the White House and Wall Street analysts alike, as polls show consumers believe things are much worse than their own spending habits or employment status show. The dour sentiment has spread to opinion polls, dragging down Biden’s approval numbers, even as other data show resilience in the U.S. economy.
A Bloomberg News/Morning Consult poll released in October found voters trusted Republican front-runner Donald Trump on handling the cost of everyday goods and services by a margin of 12 percentage points. The gap was even wider for independent voters who are crucial to winning the election.
“We know that it takes some time for things to—for people’s perception of what’s happening in the economy to resonate,” Heather Boushey, a member of Biden’s Council of Economic Advisors, told Bloomberg Television on Tuesday. “We’re hopeful that as we see wages continue, hopefully, to out-pace inflation, that’ll help people.”
In her memo, Brainard pointed to green shoots that form the pillars of Biden’s economic pitch. For one, real gross domestic product has outpaced forecasts, while unemployment remains historically low, and below the level some analysts thought it would have to be for inflation to cool. In other words, growth is stronger than expected without millions losing their jobs, the type of soft landing many Democrats have hoped for.
The latest consumer price index data, published Tuesday, showed prices rising 3.1% annually, or 4% on the so-called core gauge, down considerably from the height of inflationary pressures and in line with expectations.
Supply chain stress that fueled inflation has also plunged from record heights, Brainard wrote. Meanwhile, wage growth has outpaced inflation over the past year, and since the start of the pandemic, she said.