Inflation, recession and the 2022 midterms
With less than six months to go until the 2022 midterm elections, the economic indicators continue to deteriorate for Democrats. While unemployment remains low, inflation is up dramatically, and interest rates are spiking.
The inflation rate hit 5.4 percent in June 2021, 7 percent in October, and 8.6 percent in March 2022, and that surge in inflation increasingly has economists and some in the business community worrying about inflation and a possible upcoming recession — just the combination that ended President Jimmy Carter’s electoral career prematurely.
Deutsche Bank has already changed its prediction from a “mild” recession to a more severe one. “We will get a major recession,” Deutsche Bank economists wrote to clients recently, according to CNN.
And then there is former Treasury Secretary Lawrence Summers. He wrote in a Washington Post op-ed piece on April 5 that “over the past 75 years, every time inflation has exceeded 4 percent and unemployment has been below 5 percent, the U.S. economy has gone into recession within two years. Today, inflation is north of 6 percent and unemployment is south of 4 percent."
Summers, who was Treasury secretary under President Bill Clinton, now sees an 80 percent chance of a U.S. recession by next year.
92% of voters are concerned with inflation. Just the threat of an economic slowdown, combined with voters’ concerns about higher prices for food, gasoline and pretty much everything else, would rattle the public’s confidence and puts Democrats even more on the defensive.
If President Joe Biden stresses that the economy is still growing, he risks looking out of touch. And it he turns to a revised "Build Back Better" plan, he has to call for more government spending during a period of inflation — not exactly an ideal place to be.
It really doesn’t matter who missed the boat on inflation. The one thing certain is that an incumbent president will get the blame. Indeed, Biden already has.
The new, April 24-28, 2022, Washington Post/ABC News poll, for example, found that only 28 percent of adults approved of the job Biden is doing on inflation, while 68 percent disapproved. On the economy as a whole, 38 percent of adults approved of Biden’s handling, while 57 percent disapproved.
The survey also showed that 50 percent of Americans trust Republicans to do a better job handling inflation, compared to only 31 percent who trust Democrats.
Either inflation or rising unemployment would be a considerable problem for Democrats in 2022 and again/or in 2024. Both at the same time — stagflation — obviously would be a nightmare for Biden and his party.