LEILA FADEL, HOST:
It's the top issue for Americans, one that often decides presidential elections - the economy.
ASMA KHALID, HOST:
It's shown some strong signs as of late - receding inflation, low unemployment, better-than-expected job growth, and people are even spending record amounts of money this holiday season. But President Biden does not seem to be benefiting politically. So what is going on here?
FADEL: NPR senior political editor and correspondent Domenico Montanaro is joining us now to tell us. Hi, Domenico.
DOMENICO MONTANARO, BYLINE: Hey there. Good to be with you.
FADEL: OK, so let's talk about the politics of all this. What argument is the White House making about how President Biden has contributed to the state of the economy?
MONTANARO: Yeah. I mean, they say that the fundamentals are strong. Inflation's come down. Unemployment continues to be low. And that job growth is pretty strong. But that really isn't filtering down to how Americans feel about the economy. Polls have found that just 1 in 5 people rate the economy as at least good. And they say that they don't like how Biden is handling it.
FADEL: OK, so if there are positive signs for the economy, why do people feel this way?
MONTANARO: I mean, there are a lot of crosscurrents here. You know, the bottom line is I just don't think people look at this in a macroeconomics kind of way.
FADEL: OK.
MONTANARO: I think it's pretty simple. When people see big signs with gas prices higher than they'd like, and when they see that their bill at the checkout counter in the grocery store is 20, $30 higher than they'd paid, you know, say, a year or two ago, then that stings. And it sits with them. You know, even though inflation has receded, that really doesn't mean that the price of your morning coffee and eggs are going back to where they were - just that they're not going up as much as they had been.
You know, plus, the Federal Reserve has hiked interest rates several times over the last two years in an effort to bring down inflation. That's made taking out loans more expensive. So the irony here is that the very tool that's being used to curb inflation is also making buying a house more difficult, and people are blaming Biden.
FADEL: So is there something more going on here than just economics?
MONTANARO: Yeah. I mean, there's a lot of politics at play here, too. You know, whether people think the economy is good or bad isn't just dependent on prices or the unemployment rate. This is also about who you ask and which party is in the White House when you ask. What we found is that when a new administration comes in, there's been a sharp reversal in perceptions of the economy by party. And it's especially true of Republicans.
You know, for example, the Pew Research Center found that at the tail end of the Obama presidency, with unemployment just below 5%, only 18% of Republicans rated the economy as good or excellent. But after Trump took office, Republicans jumped to 81%. With Biden in office, Republicans' views of the economy nosedived again to 10%. Now, sure, inflation went up, obviously, but that kind of whiplash just can't be explained by economics alone, especially considering that inflation was flat between the end of the Obama White House and to Trump's time in office.
FADEL: OK. Well, going forward here, 2024 is an election year. So if voters aren't buying what Biden is selling on the economy, how difficult does that make his reelection chances?
MONTANARO: It's a big problem, especially when only 28% of Democrats in the Pew polling are saying that they think that the economy is good right now. You know, Biden has to hope that the economic good news continues, that inflation continues to come down and that the Fed gets more confident in the fundamentals of the economy, moves to cut rates and makes it easier for people to do things like buying a house or car. But this is not an easy political problem for Biden to solve at all.
FADEL: NPR's Domenico Montanaro, thank you so much.
MONTANARO: You're welcome. Transcript provided by NPR, Copyright NPR.
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