‘Morning in America’ eludes Biden, despite economic gains

President Ronald Reagan led the “Morning in America” message to a major reelection victory in 1984, based in part on warm feelings about his economic performance. Today’s economy is in many ways similar to what Mr. Reagan faced when he started that campaign, with one major difference: There is widespread fear among voters about the incumbent’s economic stewardship.

A New York Times/Siena College poll shows President Biden trailing his likely Republican opponent, former President Donald J. Trump, in key battleground states. Respondents to the survey rate the economy poorly and say they have more confidence in Trump’s solution to the problems. That’s true even as the economy grew faster last year and added more jobs than forecasters expected, while inflation fell sharply from its highest level in four decades.

In public and private conversations, and in consultation with outside economists and other experts, Mr. Biden’s economic team has been consumed by that discrepancy: Why do Americans remain so negative about the economy while economic data is trending upward?

The answer is almost certainly a combination of how Americans are processing the economic moment and how Mr. Biden is communicating about it.

In both cases, the contrast with Reagan – and with the economic climate of the early 1980s – is instructive.

In the fall of 1983, Mr. Reagan’s reelection was not assured. The country was still emerging from a recession that had marred his first two years in office. Consumer prices had risen more than 15 percent since he took office — almost as much as under Biden’s leadership. Translated into today’s dollars, the price of a gallon of gasoline was about $3.80, about 40 cents higher than it is now. Wages for the typical American had not increased at all during Reagan’s term, after adjusting for higher prices, similar to Mr. Biden’s experience.

But public confidence in the economy, and in Reagan’s handling of it, was considerably stronger than for Biden.

The University of Michigan’s Index of Consumer Sentiment was roughly 50 percent higher under Reagan in the fall of 1983 than it is today. Polls showed his approval rating, including sentiment on the economy, rising, a reversal from the start of the year.

A year later, Mr. Reagan would air “Proouder, Stronger, Better,” a television commercial that began with the words “It’s morning again in America.” It highlighted falling inflation and lower interest rates, allowing more Americans to buy a home.

Mr. Reagan’s appeals worked in part because Americans had just endured more than a decade of persistently high prices and high interest rates. Economists and historians generally agree that voters have come to see the progress under Reagan as a relief after a long, difficult period.

Voter psychology is very different under Mr. Biden. The country’s annual inflation rate of 9 percent last year was more than three times higher than the average from the end of Mr. Reagan’s time in the White House to the beginning of Mr. Biden’s. That mortgage rate that Mr. Reagan trumpeted? In 1984 this percentage was approximately 14 percent. The percentage is currently just under 8 percent. The difference is that under Mr. Reagan, interest rates fell, and under Mr. Biden, interest rates rose.

For Mr. Biden and his economic team, “the problem is really in the way people think about and process economic information, and not in the economic fundamentals,” said Francesco D’Acunto, an economist at Georgetown’s McDonough School of Business University, who recently gave a letter to the White House Council of Economic Advisers.

Mr. D’Acunto presented slides at the White House highlighting the work he and his colleagues have done, delving deeper into how consumers are digesting price increases. They find that consumer attitudes are most determined by the products they buy most often – such as milk, petrol, bread and beer – rather than the things they spend the most money on.

They also notice that unexpected price increases stick negatively in the minds of shoppers. They stick around in a way that slower increases in construction prices, or even extended periods of high prices, do not.

That research helps explain why voters did not punish Mr. Reagan for inflation, even though the price growth he oversaw never reversed: They were accustomed to rapid price growth and grateful for improvement.

An overly simplistic explanation for Biden’s woes is that voters are waiting for prices to fall back to pre-pandemic levels. If that were true, Biden would almost certainly be electorally doomed. Overall, the price path in American history has been an upward trend.

But Mr D’Acunto says his research suggests Mr Biden could brighten voters’ moods by mounting a public persuasion campaign, focusing on prices that have started to fall from recent highs. This also applies to consumer electronics such as smartphones and computers, which are on average cheaper today than a year ago, and which often require large amounts of money.

Biden’s campaign recently spent $25 million on television advertising to promote “Bidenomics” — a mix of the president’s working-class background and the policy blueprint intended to resonate with the working class. It includes an ad that takes aim at a provision in the Inflation Reduction Act, which Mr. Biden signed last year, that aims to lower prescription drug costs through Medicare. Campaign officials say it scores well in viewer surveys.

There is little evidence from the polls that these efforts have been successful. Biden aides say they did not expect immediate results. They are testing messages, they say, including how best to talk about Biden’s economic record as the president prepares to spend $1 billion or more on advertising before the election.

Aides also emphasize that continued economic improvement will eventually trickle down to the public. They argue that continued wage growth will restore some of the purchasing power Americans have lost due to recent inflation, and that consumers will gradually get used to prices higher than what they were used to before the pandemic.

“What the president brings to the table is a deep and effective pro-worker agenda that maintains a great labor market and puts downward pressure on prices,” Jared Bernstein, chairman of the Council of Economic Advisers, said in an interview. “I understand that this has not yet reached the sentiment indexes. But I am confident that will happen.”

Some Democrats worry that Mr. Biden himself is a barrier to delivering that message, especially to younger voters who express concerns about his age. Campaign officials say his direct calls are resonating well in tests. The Reagan comparison provides evidence for both sides.

Economic surveys have become more politicized in recent years, with Republicans in particular resistant to praising the economy’s performance with a Democrat in office. Still, parts of the Michigan study suggest that Reagan was far more successful than Biden as an economic cheerleader.

Mr. Reagan made a habit of both defending the economy’s performance and criticizing press coverage of its shortcomings. At this point in his presidency, Americans were much more likely to hear positive news about the economy and prices than under Mr. Biden. They even reported hearing better news about unemployment, at a time when the rate was almost 9 percent. Today it is below 4 percent.

Mr. Biden has often tried to strike a better balance between celebrating strong job growth and acknowledging the pain of high prices. He has placed more emphasis on boosterism in recent months — as the share of Americans reporting good economic news in the Michigan index has grown.