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This week in Bidenomics: The president’s unpopularity, explained

Democrats have struggled to understand how job growth can be stellar and unemployment close to record lows, yet President Biden’s approval rating remains stuck in the low 40% range. An even smaller portion of Americans approve of Biden’s handling of the economy.

The Census Bureau may have solved the mystery when it released its annual update on income and poverty earlier this month. The median household income in 2022 was $74,580, a drop of about $1,750 from the year before. And income in 2021 dropped $330 from the year before that.

Compared with 2020, when Biden won the presidency, household incomes have fallen $2,080, or 2.7%. Those numbers are adjusted for inflation, so they reflect real declines in living standards.

Inflation is the culprit. Nominal wages have risen, but inflation has risen more. “The rate of inflation outstripped the rate of pay increases so that the income of most households did not buy as much,” William Galston of the Brookings Institution wrote recently. “Americans noticed this decrease, and as the polls indicate, they did not like it.”

Since the Census numbers are annual figures, they’re somewhat outdated. And the trend has improved in 2023. Real income flipped from positive to negative in April 2021, meaning that inflation started rising by more than wages. More than two years later, real income finally became positive again, in June of this year, thanks to a rapidly falling inflation rate. So there’s a good chance household incomes in 2023 will rise from the depressed 2022 level. If Biden gets lucky, the trend could be accelerating a year from now, when voters are making up their minds about whether Biden deserves a second term.

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For now, however, many voters sense that they were doing better when Donald Trump was president, even if they don’t like Trump. The data supports that, to some extent. Real incomes grew by healthy margins from 2013 to 2019, a span that covers most of Barack Obama’s second term, and most of Trump’s single term.

Trump may have benefited from that more than Obama did, since income gains had better momentum when Trump took office. Obama came into office during the Great Recession, which left a whopping hangover and depressed incomes from 2007 to 2012. The recovery in incomes that began in 2013 was slow at first, but it picked up after a couple of years, peaking in 2019.

Voters tend to credit or blame the president for whatever happens on his watch, but the economy is a gargantuan, complex machine that doesn’t respond much to presidential policies. The Obama malaise was largely due to the deep damage done to the housing market and to consumer balance sheets during the Great Recession. Trump came into office just as all of that was wearing off and benefited as the economy finally regained its footing.

The 2020 downturn, which occurred in Trump’s last year, was the first drop in household income since 2011. But that was largely due to the COVID pandemic, not to Trump policies.

So what about Biden? Voters clearly blame him for inflation that reached a peak of 9% in June of 2022. It’s now down to 3.7%, a considerable improvement. But Biden’s approval rating hasn’t improved as inflation has come down, which indicates voters are still feeling the pain of inflation and not yet in a mood to forgive the incumbent for lost purchasing power.

Biden’s critics are convinced that a single piece of legislation — the $2.2 trillion CARES Act Biden signed in March 2021 — is solely responsible for the inflation that peaked a year later, hammering family budgets. That’s mostly false. Starting in 2020, Congress passed $6 trillion worth of COVID stimulus, the majority of it during the Trump administration. In toto, all of that money gushing into the economy probably did goose inflation. But it also rapidly popped the United States out of a recession and fueled the strongest recovery of any advanced nation.

Supply chain snafus caused by the pandemic contributed more to inflation, as did massive shifts in spending patterns by Americans suddenly stuck at home, buying everything they could find. There were other factors, too, but as any politician knows, when you’re explaining, you’re losing.

Biden’s real inflation problem is that he simply needs voters to forget about it. He can’t explain it away. The details are too arcane and the disinfosphere has given everybody who wants to blame Biden a reason to do so. The trends are now in Biden’s favor, but whether voters warm to him during the next 12 months may now be a matter of how good their memories are.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.

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