The economy is booming, but inflation continues to sour Americans

President Biden has played a considerable role in improving Americans’ financial situation, through legislative victories that have yielded a surge in government funding and related private investment, which is building electric vehicles, new bridges, airport upgrades and a host of other infrastructure and green energy projects that have juiced the economy.

Yet Americans are still angry that prices rose as much as they did, showing up in consumer sentiment that has fallen for three straight months. Just 30 percent of voters approve of President Biden’s handling of the economy, the lowest reading since he took office, according to a Washington Post-ABC News poll.

That disconnect between a booming economy and how Americans feel about it appears to be widening at a critical time ahead of next year’s presidential election. It is also shaping up to be a key liability for the White House, even as its policies are bolstering job creation and business investments.

For many voters, the economy’s recent growth comes alongside other realities, such as high inflation, rising interest rates that have made loans more costly and dwindling savings. Importantly, home prices are at an all-time high, and housing affordability is near a record low, which is also influencing people’s feelings about their finances.

“Those are all very salient things: how much you’re spending at the grocery store, how much you’re paying in rent, whether you can afford to move,” said Jonathan Rothwell, principal economist at polling giant Gallup. “Those factors are very important to people’s sense of how the economy is doing, and they’re not performing well.”

Inflation, at 3.7 percent, has come down dramatically from last summer’s high of 9.1 percent and is expected to decline even further in this week’s reading. But it’s still well above what policymakers would like and has become a sticking point for households across the country. Basic expenses, such as food, housing and transportation, are considerably higher than they were a year ago, even as energy prices have declined.

At the same time, families are quickly spending down the trillions in extra cash they had amassed during the pandemic. There is a growing sense among Americans, economists say, that they’re having to overspend to maintain their pre-pandemic standard of living, which is clouding their view of the broader economy.

That’s creating ongoing challenges for the president. The White House has been playing up its “Bidenomics” plan — which has spurred more than $1 trillion in public and private investments in infrastructure, clean energy and semiconductors — with creating new jobs and helping workers secure higher wages. That money is already making its way through the economy and boosting growth.

Infrastructure and green energy spending are powering the economy

But the bigger struggle, political analysts say, has been making it clear to Americans that the local improvements they’re seeing, in roads, high-speed internet connections and airports, are being powered by Biden’s policies. Many federal funds are being doled out through state and local governments, and are often going to businesses and contractors instead of directly to families.

“‘Bidenomics’ is the right plan. It’s the right approach, and we need to just work every day to show Americans how it is delivering for them around the kitchen table,” Lael Brainard, director of the National Economic Council, said in an interview. “That’s our focus: trying to make that connection that clean drinking water, affordable high-speed internet, lower drug prices, better jobs — these are all things the president is delivering every day.”

So far, the message appears to be falling flat. A recent New York Times/Siena poll shows that a vast majority of voters in battleground states — 81 percent — say the economy is “fair” or “poor.” Meanwhile, 59 percent of voters in those states said they trusted Trump’s handling of the economy over Biden’s.

Those low marks come even as the U.S. economy has, by many measures, notched quarter after quarter of strong growth. Employers have added 14 million jobs under Biden’s watch, and household wealth surged during the pandemic. The median net worth of U.S. families grew by an unprecedented 37 percent between 2019 and 2022, to $192,900, according to the Federal Reserve’s Survey of Consumer Finances.

But there are also signs the biggest income gains went to the wealthiest Americans, according to the Fed’s survey, while average incomes inched down for those at the bottom.

“A lot of the gains that have been reported in the economy have been oriented toward wealthier people,” said Stephen Moore, an economist at the Heritage Foundation, a conservative think tank, and an economic adviser to President Donald Trump. “People are feeling financially stressed because over the last two years, inflation has gone up and they’re falling behind.”

Recent union victories could help push wages even higher. In the last four months, hundreds of thousands of workers — including delivery truck drivers, health-care workers, Hollywood writers and, most recently, autoworkers and actors — have secured historic union contracts with higher pay and more job security.

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The president made history this fall when he joined autoworkers on the picket line and played a supporting role in getting the deal done, making phone calls to automakers and urging them to stick to the negotiating table. Meanwhile, top Labor Department officials have been involved in recent union negotiations, including at Kaiser Permanente, where 85,000 health-care workers last week ratified a four-year contract that bumps the minimum wage to at least $23 and gives existing workers a 21 percent raise.

“This is a moment for workers, in which workers are winning at the bargaining table, they’re winning in the workplace,” said Julie Su, the Labor Department’s acting secretary. “All of those things did not happen by accident. They happened because this president has been very clear that when we build an economy that does right by workers, that’s good for employers and that’s good for the nation.”

Whether that will translate to higher approval ratings or votes, though, is unclear. White House officials say the strong economy and tight labor market made these contract negotiations possible in the first place, by giving workers the leverage to demand better working conditions. At the same time, union workers in some states have moved away from the Democratic Party in recent elections.

“The big problem for Democrats right now is that Trump did very well with Blue Collar America, no question about it, and a lot of those blue-collar workers are union workers,” Moore of the Heritage Foundation said. “It’s quite possible that by winning these big union concessions, that some of them will migrate back to the Democrats. But if I were a Democrat, I’d be very nervous about the abandonment of the rank-and-file union members.”

The Biden administration though, has a year to turn around its approval ratings and convince Americans that it’s doing enough to improve their financial standing. White House officials say they feel optimistic that Americans will begin to feel better about the economy, particularly as energy costs continue to recede. Average gas prices nationwide have fallen roughly 11 percent in the last year, from $3.80 a gallon to $3.40 a gallon, according to AAA.

The administration is also working to drive down health-care costs by capping prescription drug prices for seniors on insulin, for example, which “will help Americans feel more confident,” according to a senior White House official.

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“We are still recovering from the pandemic and its devastating effects on the economy,” said Su. “Workers are, like everybody else, reassessing their role in the economy. They’ve had four decades of increased productivity but stagnating wages. It’s going to take some time for us to build an economy in which those concerns are addressed.”

By any measure, Robert Huber and his fiancée are doing well: They make six figures apiece, have gotten consistent raises and are preparing to close on a custom-built house in Midlothian, Va.

Still, he said they feel the continued squeeze of inflation.

“With food and utilities going up, it doesn’t matter what your budget level is — we’re all feeling the pinch,” said Huber, 46, who works in health-care sales. “We’re doing well, but we’ve certainly cut back on things. When you go to the grocery store and steaks are $14 a pound, when they used to be $7 a pound, it’s like, ‘Eh, maybe I’ll get something else for dinner today.’ It forces you to rethink your budget.”

Americans are still better off, with more in the bank than before the pandemic

Huber, a registered Independent who voted for Biden in 2020, said he plans to do so again. He doesn’t blame the president for rising prices — after all, he said, many other parts of the world have it much worse. But he said the administration could be doing more to connect with Americans.

“Where I think he’s messing up is with the messaging,” he said. “I know GDP’s up and the job market has been favorable, but that’s not what people care about. They want to know: How are you going to lower the price of my breakfast cereal?”

Jeanne Whalen contributed to this report.