A year ago, when inflation seemed out of control and the economy was overheating, Federal Reserve chairman Jerome H. Powell started slowly but surely raising interest rates to slow down economic growth and reduce inflation. Many economists feared that this would inevitably lead to a recession, just as it did back in the 1980's, the last time inflation was out of control.
But recent numbers have revealed that country may be in for what's called a soft landing, that just right mixture when higher interest rates reduce inflation without causing the country to fall into an outright recession. Powell recent comments show that he believes inflation, which has fallen from 9.1 percent in 2022 to 3.1 percent, is now under control and that no further raising of interest rates will be needed anytime soon. Those rates may even be lowered sometime next year. All of this is happening while the country's unemployment rate remained at a historically low 3.7 percent. The good news saw the stock market rally to new heights.
But will this good news sink in with the American people? Recent polls that show Donald Trump defeating Joe Biden in next year's election show not only Republicans but also independents and a significant number of Democrats trusting Trump over Biden on economic issues. Some polls give Trump a whopping ten percent edge on economic matters. The Biden administration has tried in vain to push Bidenomics as a good thing, but the country's sour mood on the economy doesn't seem to be shaking.
The reason seems to be clear: increased job and gross domestic product growth are not things that the average American can really see in their lives. But inflation? It's always there, at the gas station and the grocery store. And it's human nature to blame that inflation on the Biden administration, even though its roots lie in the days of the pandemic lockdown when Americans stayed home and bought goods online, driving up demand while supply lines were often compromised by covid.
The hope here is that by the time the election roles around, the public will get used to the higher prices (which won't be increasing at an alarming rate anymore), and Biden will start getting some credit for the economy. This was the same winning formula that Ronald Reagan had back in the 1980's, when the recession ended just in time for him to win reecletion in a landslide. That combined with Trump's legal troubles and the backlash against Republicans since the overturning of Roe Vs. Wade may be enough to win Biden a second term. Considering Trump's dangerous rhetoric about his desire to be a dictator, I certainly hope that that will be the case. Biden may be old, but I would vote for Methuselah before I vote for Trump.
