Inflation Is Biden’s Election Headwind

These claims are factually correct, and they outline a conundrum: If the labor market is so strong and the overall situation is improving, why are voters so discontented about the economy and giving Mr. Biden such low marks for his economic management?

According to a recent Economist/YouGov survey, only 18% of voters think the economy is improving, while 53% think that it is getting worse. Twenty-one percent say the economy is growing, while twice as many—42%—say that it is shrinking. More than half believe that the U.S. is in a recession. Standard economic measures tell us the economy is growing at a modest pace.

Another finding from the poll helps resolve the puzzle. When asked to name the best indicator of the state of the economy, 6% of voters cited the stock market, 16% the unemployment rate—and 54% the prices of the goods and services they buy.

For most voters, the negative effects of inflation outweigh all the economic improvements Mr. Biden noted. When asked to assess the change in their personal finances over the past year, 12% said they were better off, 41% saw no change—and 44% said they were worse off. Much more than anything else, inflation is shaping overall economic perceptions, and only 35% of the electorate approves of the way the president is handling this problem.

According to some standard labor-market statistics, these Americans are right to think that their circumstances are at best stagnant. Monthly reports from the Bureau of Labor Statistics show that the average hourly wage for production and nonsupervisory workers has risen from $25.18 when Mr. Biden took office to $28.75, a gain of about 14%. But the consumer-price index rose by 15% during this period, leaving wages a bit lower after inflation. At the same time, according to the BLS, average hours worked per week declined from 34.4 to 33.8, leaving median weekly earnings of full-time workers nearly 3% lower than in January 2021. The Census Bureau reports that a broader measure of financial well-being—median household income corrected for inflation—declined from $71,186 in 2020 to $70,784 in 2021. (Information for 2022 is not yet available.)

Most Americans’ perceptions of the economy are shaped by experience, not statistics, and some parts of experience stand out from the rest. A recent Journal article had the headline “Steaks Are High and About to Get Higher.” Cattle supplies are shrinking, costs of raising cattle are rising, and ranchers’ profit per head has declined from $400 in 2014 to $12 in 2022. In the past two years, the average price of beef steak has risen from about $8 a pound to nearly $10.

My wife and I have an above-average income, but we suffer sticker shock every time we go to the grocery store, and we’ve made some changes in our purchases. (The consequences must be more severe for households that earn less than we do.) As Americans have emerged from pandemic isolation and travel to see family and friends, airline ticket prices have soared. Housing has become much less affordable both for renters and for younger adults trying to buy their first homes.

A recent report from presidential bellwether Door County, Wis., underscores these trends. Rising grocery prices and labor costs forced the owner of a bed-and-breakfast to raise room rates by 15%. A contractor’s wife, who is Hispanic, complains that the price she pays for a gallon of milk has doubled and that she can afford less and less. Although she initially welcomed Mr. Biden as “less racist” than his predecessor, she now thinks that “things were better under Trump.”

These sentiments are a dagger pointed at the heart of the Biden campaign, especially when they are intertwined (as in Door County) with concerns about immigration. Statistical comparisons showing that America is doing better on inflation than other countries will have no political effect.

Unemployment is yesterday’s battle and perhaps tomorrow’s. But inflation is still running at twice the Fed’s target of 2%. If I were Mr. Biden, I would acknowledge that rising prices are now the electorate’s core economic concern, and I would put my determination to bring prices under control at the center of my economic message.