US President Joe Biden speaks during the DNC meeting in Miami Gardens, Florida, USA, Tuesday, November 1, 2022.
Eva Marie Uzcategui | Bloomberg | Getty Images
Concerns about 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.
The latest survey shows that consumer sentiment has risen only modestly and remains well below where it was a year ago, when inflation worries first gripped policymakers, shoppers and business executives.
A report released Friday describes the problem for Washington’s current governing party. The University of Michigan, which releases a closely-watched sentiment survey every month, asked respondents who they trust more in the economy and which is better for personal finance.
The result: overwhelmingly Republican.
The survey of 1,201 respondents saw Republicans with a 37%-21% edge on the question of which party is better for the economy. Although it leaves a wide gap – 37% – of consumers who do not think it makes a difference, the difference is that people like it very much. (The survey did not distinguish whether respondents were likely voters.)
In fact, among all demographics, the only one in favor of the Democrats’ was the only party group. Whether it’s age, household income or education, all other groups favor the GOP.
In overall sentiment, the Michigan survey saw a reading of 59.9 for October, 2.2% better than September but 16.5% below the same period a year ago. That reading just fell in June 2022 and is on track to reach its lowest level in more than 11 years, according to data going back to 1978.
“This is a big problem” for Democrats, said Greg Valliere, chief strategist of US policy at AGF Investments, which specializes in the impact of politics on financial markets. “They have seen enough evidence since Labor Day to show how the economy dwarfs every other problem, but they don’t do anything about it. They don’t say the right thing, they don’t show enough empathy. For me, this performance is really sorry.”
Valliere thinks the problem could be so big that Biden should announce soon that he won’t seek a second term in 2024.
“I think Democrats have a lot of problems right now,” he added.
Consumer confidence is also at an all-time high in real estate, with only 16% of respondents saying that now is a good time to buy, according to a Fannie Mae survey that goes back to 2011.
That kind of reading is not good for the party in power.
Former President Donald Trump lost his bid for re-election in 2020 when Michigan polls were just above his initial pandemic. Conversely, Barack Obama won re-election in 2012 when the survey was riding a five-year high. George W. Bush captured his bid for a second term in 2004 when the sentiment was middling, but Bill Clinton triumphed in 1996 when the Michigan gauge was at a 10-year high.
As for congressional control, in the 2010 midterm elections, when the Obama-Biden administration lost an amazing 63 House seats, the largest victory since 1948, the reading was at 71.6. That’s only slightly better than the year before when the economy was still coming out of the financial crisis.
Today, people are mainly worried about inflation.
After declining for two consecutive months, October’s one-year inflation outlook stood at 5%, up 0.3 percentage points from September and the highest reading since July. The five-year outlook also rose, up to 2.9%, and tied for the highest level since June.
The University of Michigan survey also found respondents have more confidence in Republicans when it comes to the fate of their personal finances.
The GOP held a 15-point lead over Democrats in that category, including a 19-point edge among independents.
Surveys show high expectations that Republicans will prevail in Tuesday’s election and wrest control of Congress back from Democrats.
On both general economic and personal finance questions, Republicans did far better among those holding a high school diploma or less, with a 25-point edge on both questions. College degree holders give the GOP an 8-point edge in the economy and a 10-point advantage in personal finance.