US President Joe Biden speaks during a DNC rally in Miami Gardens, Florida, US, Tuesday, November 1, 2022.
Eva Marie Uzcategui | Bloomberg | Getty Images
Concern over the cost of living and the direction of the economy could prove costly for President Joe Biden and his fellow Democrats in Tuesday’s election.
Recent surveys show that consumer confidence has risen only modestly and remains well below what it was a year ago, when inflation worries began to grip policymakers, shoppers and business leaders.
A report released Friday outlined the problem for the current ruling party in Washington. The University of Michigan, which releases a closely watched confidence survey every month, asked respondents who they trust most when it comes to the economy and what would be best for their personal finances.
Result: majority Republican.
The survey of 1,201 respondents saw Republicans with a 37% to 21% advantage on which party is better for the economy. While this left a large swath – 37% – of consumers who don’t think it makes a difference, the disparity of those with a preference is huge. (The survey did not distinguish whether respondents were likely voters.)
In fact, of all the demographic groups, the only one in favor of the Democrats was the one-party group. Whether it was age, household income, or education, every other group was pro-GOP.
On general sentiment, the Michigan survey saw a reading of 59.9 for October, 2.2% better than September but 16.5% lower than the same time a year ago. The reading is just off its all-time low in June 2022 and is approaching its lowest level in more than 11 years, according to data dating back to 1978.
“It’s a huge problem” for Democrats, said Greg Valliere, chief U.S. policy strategist at AGF Investments, who specializes in the impact of politics on financial markets. “They’ve seen enough evidence since Labor Day to show how the economy eclipses all other issues, but they haven’t done anything about it. They haven’t said the right thing, they haven’t didn’t show enough empathy. For me, that was a really sorry performance.”
Valliere thinks the issue could become so big that Biden may have to announce soon that he won’t seek a second term in 2024.
“I think Democrats are in a lot of trouble right now,” he added.
Consumer confidence has also hit an all-time low when it comes to housing, with just 16% of respondents saying they think now is the time to buy, according to a Fannie Mae survey dating back to 2011.
These types of readings do not bode well for the ruling party.
Former President Donald Trump lost his 2020 re-election bid when the Michigan poll was just above its first coronavirus pandemic low. Conversely, Barack Obama won re-election in 2012 as the poll reached its highest level in five years. George W. Bush won his bid for a second term in 2004 amid poor sentiment, but Bill Clinton triumphed in 1996 when Michigan’s gauge was at its highest level in 10 years.
As for control of Congress, in the 2010 midterm elections, when the Obama-Biden administration lost 63 House seats, the biggest rout since 1948, the reading was 71.6. It was barely better than the year before, when the economy was still emerging from the financial crisis.
Today, the public is particularly anxious about inflation.
After falling for two consecutive months, the one-year inflation outlook for October came in at 5%, up 0.3 percentage points from September and the highest since July. The five-year outlook also rose, up 2.9%, and tied for the highest level since June.
The University of Michigan survey also found that respondents trusted Republicans more when it comes to the fate of their personal finances.
The GOP held a 15-point lead over the Democrats in this category, including a 19-point advantage among independents.
The survey showed Republicans expected Republicans to win in Tuesday’s election and regain control of Congress from Democrats.
On questions of general economics and personal finance, Republicans fared much better among those with a high school diploma or less, with a 25-point advantage in both questions. Those with college degrees gave the GOP an 8-point edge on the economy and a 10-point edge on personal finance.