Biden hasn’t yet received a bump in the polls for an improving economy
Indeed, the relationship between these two measures is not perfect. However, when consumer confidence increased under Republican Ronald Reagan and then again under Democrat Bill Clinton, both in the 1980s, the presidential approval ratings increased at the same rate.
In contrast, the confidence level plummeted in 2008, after the financial crisis, while George W. Bush, a Republican, was at the White House. In 2008, his approval ratings plummeted, and this helped Democrat Barack Obama be elected President when Bush stepped down.
Chart showing the presidential approval levels
Data from The Federal Reserve Bank of St Louis Database and the American Presidency Project, provided by the author (no reuse).
There is a strange anomaly in the graph – this is a breakdown of this relationship after Joe Biden became president in 2021. The COVID pandemic was a major factor in the rapid decline of consumer confidence prior to Biden’s presidency. After his inauguration, this continued, but in the spring of 2023, when COVID-19’s threat began to diminish, consumer confidence began to improve. Biden’s ratings didn’t follow suit. They remained at 41% by the end of the year (with 56% of people disapproving).
What could be the cause of this? It is possible that Americans feel gloomy at present about the state of their country. In December 2023, a Gallup survey showed that only 22% of Americans were satisfied with the current state of their nation. 77% were dissatisfied. Biden has clearly felt the effects of this downbeat mood. There are also concerns that his age makes it hard to maintain such a demanding position.
This does not necessarily mean that Donald Trump has an advantage if he is nominated for the Republican Party later this year. In December 2020, the last month of his presidency, only 16% of Americans felt satisfied about the state of the country, while 83% were unhappy. At 77, he’s almost as old as President Obama, so it makes no sense to make age a factor in the election.
Trump can’t credibly claim that he did better than the president at the end of his tenure. In contrast to 2016, when he first won the election, his overall track record of gaining public trust in office was rather dismal, despite all his public support. Biden Tweeted the following quote from his father, “Don’t Compare Me to Almighty.” Compare me to an alternative.”
The US economy may be doing well right now, but voters haven’t felt it yet.
According to the US Bureau of Economic Analysis, the real Gross Domestic Product (GDP), which takes into account inflation, increased by an impressive 4.9% during the third quarter of the year 2023. The GDP indicator can be vague and feel far from reality for the average person. Biden has not seen an increase in economic indicators in the lead-up to the November 2024 presidential election.
Does the US phrase “it’s the Economy, stupid” (used by Americans for decades to explain the reasons people vote) apply to Biden? Consumer psychology must catch up to the economic boom if the president wants to reap the benefits. He also has to depend on voters not being deterred by the general doom about the state of the nation. What are the chances of this?
Consumer confidence levels
Federal Reserve Bank of St Louis, Author-supplied database (no reuse).
Above, the second graph shows the relationship between the consumer confidence index and the misery indices in the US for the same 45-year period. The misery index, which is the summation of inflation and unemployment rates, shows how bad the economy is when it is increasing at a given point in time. The variables are displayed in logarithmic scaling (a way to show data in an organized way). The logarithms do not affect the relationship between the variables, but they make it easier to compare.
The misery index is used by academics in order to analyze the relationship between voting and the state of the actual economy. It provides an objective measure of economic performance. This can be compared to the “subjective measure” of consumer confidence.
The two variables have a very strong negative or inverse relationship. When the economy entered a recession following the 2008 financial crash, the misery indice rose rapidly, and consumer confidence dropped. When the COVID epidemic hit the economy in 2021, the misery index soared, and consumer confidence fell. On that occasion, the misery index changed abruptly, while the consumer trust index dropped more slowly.