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US President Joe Biden waits to welcome President William Ruto of Kenya to the White House in Washington on May 22, 2024.
It’s Biden’s economy, stupid
The United States is plagued with a “vibecession” — where confidence in the economy is at stark odds with the actual data.
A new Harris poll forThe Guardian shows nearly three in five Americans believe the economy is shrinking and in recession. Nearly half of those polled also believe US unemployment is at a 50-year high.
But none of that is true.
So why the disconnect?
Much of the bad vibes are lingering from America’s post-COVID economic recovery. The US generally bounced backbetter than its peers, but inflation is still squeezing average Americans while the Federal Reserve is keeping interest rates high. Even if the stock market and GDP reachnewheights, so is Americans’ cost of living — and at a time when it costs more to borrow.
Another vibecession culprit: politics, baby. OneYouGov poll shows the percentage of Republican respondents who thought the economy was improving dropped from 64% in November 2020 to 6% after Biden’s inauguration in January 2021. Unsurprisingly, Democrats’ views on the economy also shot way up after Biden took office, without much changing economically.
If Americans’ perceptions of the economy are deeply entrenched with their political affiliation, is there anything Biden can do ahead of November’s election? His administration is working to bring downgas prices and slashstudent debt. But as long as prices and interest rates stay high, he may have a hard time swaying voters’ historically low confidence in his ability to do the right thing for the economy.A Russian Soyuz rocket is carried to the launching pad at Russia's Baikonur cosmodrome on the territory of the former Soviet Kazakhstan on December 18.
Hard Numbers: Russia shoots down space resolution, US economy sputters, Nigerian prisoners make slippery escape, Ecuador gets lifeline
13: A UN Security Council resolution reaffirming a long-standing prohibition on arms races in outer space got 13 votes in favor this week, but it was shot down by a single veto from UNSC permanent member Russia. Moscow says it wasn’t necessary to support a resolution that merely reaffirmed a 1967 treaty that Russia is already part of, but the US ambassador to the UN asked, “What could you possibly be hiding?” In recent months, the US has said it believes Russia is developing a new space-based, anti-satellite weapon.
1.6: The US economy expanded by just 1.6% in the first quarter of the year, lagging analyst forecasts by nearly a full percentage point, as consumer spending slowed. Normally that would create momentum for the Fed to cut interest rates to spur growth, but there’s no joy there either: Core inflation (which excludes food and energy) rose 3.7%, higher than economists expectations, limiting the scope for any near-term rate cuts.
118: Authorities in the Nigerian capital of Abuja are on high alert after a rainstorm destroyed a fence at a nearby penitentiary, allowing as many as 118 inmates to escape. A prison service spokesperson blamed “colonial era” facilities. Weak security and run-down buildings contribute to frequent prison-breaks in the West African nation.
4 billion: After months of talks, Ecuador and the IMF agreed to a $4 billion loan agreement meant to help stabilize the small Andean country’s finances as it grapples with a vicious cycle of economic hardship, rising poverty, and skyrocketing homicides. Just days earlier, Ecuadorians had voted yes in a referendum to boost the government’s ability to crack down on drug violence.Inflation sign going upwards
March inflation report threatens Biden campaign’s economic strategy
The S&P 500 dropped over 1% after consumer inflation rose 0.4% in March and 3.5% from the previous year, indicating that high inflation could be here to stay. The report surprised forecasters and poses a challenge to President Joe Biden's reelection chances, as persistent inflation means higher gas prices and bigger grocery bills for voters.
Energy prices continue to rise – 1.1% month over month and 2.1% year over year – thanks to wars in Ukraine and the Middle East driving up the price of oil and, as a result, inflation.
The latest figures have cast doubt on the Federal Reserve's progress toward its 2% inflation target, meaning it may reassess its interest rate plans. Investors now expect rate cuts to be pushed to later in the year, instead of earlier predictions of a March cut.
This is bad news for Biden, who has been anxious for inflation to fall even further to spur the Fed to cut interest rates — a move that would help drive down borrowing costs for mortgages, car loans, and other consumer credit.
Ian Explains: Will foreign policy decide the 2024 US election?
How much does foreign policy matter in a US presidential election? This year, more than usual.
When pollsters started asking Americans in 1948 what they viewed as the “most important problem” facing the country, foreign policy and international security dominated.
Looking ahead to the 2024 presidential election, Biden has managed to turn a Covid-ravaged economy around, with growth pegged at about three percent per quarter. Wages are going up, unemployment is at an all-time low and the stock market is coming on strongly. By every economic indicator, Biden should be surging. And yet, by every political indicator, he’s floundering.
Biden’s fate in November may hinge on whether he can convince a skeptical electorate that the economy is doing as well as it is...actually doing. But Americans’ views on the Ukraine war have shifted, with a plurality now saying the US is doing too much to help Ukraine. And half of US adults polled in February said that Israel has gone too far on its war with Gaza. Could Biden’s handling of these key foreign policy issues cost him the election in November?
It’s already clear that foreign policy will play an outsize role in this year’s election. So will immigration, which topped Gallup’s “most important problem” list in February and which is both a foreign policy issue and an economic one.
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
- Journalist Robin Wright explains why Biden’s foreign policy comes up short ›
- Israel-Hamas war: Biden's second foreign policy crisis ›
- Henry Kissinger: Towering (and polarizing) figure in US foreign policy dies at 100 ›
- Pioneering Black American leaders in US foreign policy ›
- Biden vs Trump foreign policy: Political scientist Stephen Walt weighs in - GZERO Media ›
- Why the US is sending aid to Ukraine, Israel, and Taiwan - GZERO Media ›
- Ian Explains: How political chaos in the UK, France, & Canada impacts the US - GZERO Media ›
- Ian Bremmer’s 2024 elections halftime report - GZERO Media ›
Is the global economy finally on the right track?
How’s the global economy doing… really? When it comes to the world’s post-COVID recovery, it’s a tale of two economies: the United States and everyone else. On GZERO World, Ian Bremmer sits down with economist and author Dambisa Moyo for a hard look at the health of the world’s finances and the impact of geopolitical crises in Europe and the Middle East on trade flows and inflation.
Right now, US indicators are strong, but Germany and the UK are slipping into mild recessions, and China’s collapsing real estate sector, local government debt, and exodus of foreign investment is dragging the world’s second-largest economy into stagnation. Not to mention, Global South countries are holding record amounts of debt. So what does it all mean moving forward? Is the global economy still shaking off its post-Covid hangover or are some of these problems more entrenched?
“We need to be growing at 3% per year in order to double per capita incomes in a generation which is 25 years,” Moyo says, “Most of the global south is growing below that number, materially.”
Ian Bremmer and Dambisa Moyo unpack the confusing state of the global economy, China’s economic woes, and where they see the biggest potential for growth in developing economies during the next decade.
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
- China’s economy in trouble ›
- Ian Explains: Why China’s era of high growth is over ›
- Struggling for economic progress as global recession looms in 2023 ›
- Dambisa Moyo: Europe's energy transition needs more than a "band-aid solution" ›
- The unintended effect of US-China economic breakup ›
- What saved the global economy from another Great Depression? ›
- Global economy headed to a recession ›
- What geopolitics stories could still blow up the global economy? ›
The global economy: good news and bad news from economist Dambisa Moyo
Listen: In the latest episode of the GZERO World Podcast, Ian Bremmer sits down with economist, author, and member of the UK parliament’s House of Lords Dambisa Moyo for a hard look at the health of the world’s finances, the impact of geopolitical crises in Europe and the Middle East on trade flows and inflation, and how China’s economic woes are impacting everyone else.
Right now, US indicators are strong, but Germany and the UK are slipping into mild recessions, and China’s collapsing real estate sector, local government debt, and exodus of foreign investment is dragging the world’s second-largest economy into stagnation. Not to mention, Global South countries hold record amounts of debt. So what does it all mean moving forward? Is the global economy still shaking off its post-Covid hangover or are some of these problems more entrenched?
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.
Ian Explains: Is the US economy good or bad?
What’s going on with the US economy? On Ian Explains, Ian Bremmer breaks down the confusing state of America’s financial health.
Trying to make sense of economic indicators right now can be an exercise in illogic: unemployment is down, but inflation is still stubbornly sticky. Interest rates are higher than they’ve been in two decades, but stock indexes are closing at record highs. Adding to confusion, the upcoming US presidential election means that the economy is front and center, but Democrats and Republicans have a partisan interest in making things seem worse or better than they actually are. So what’s really going on?
When you look at the world’s post-Covid recovery, America is an outlier. US GDP grew faster than any other advanced economy last year. Wages are rising faster than they have in years, inflation, while sticky, is nowhere near its 2022 highs, and unemployment has been under 4% for the longest stretch since the 1960s. So why do only 28% of US voters have a positive view of the economy right now? Some economists are calling this moment “vibe-cession,” warning the negative “vibes” could have a major impact on the presidential election in November.
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
3 themes to watch as US election season begins
Jon Lieber, head of Eurasia Group's coverage of political and policy developments in Washington, DC, shares his perspective on US politics.
With the Iowa caucuses coming up, what are the big themes to watch in American politics this year?
Monday of next week is the first day the official kickoff of the US presidential campaign season, even though it feels like it's already been going on for six years. It really only starts on next Monday with the Iowa caucuses begin. Donald Trump has a big lead in the Republican primary. Nobody's challenging President Biden on the Democratic side. And so here are three themes to watch throughout this election year.
The first is, can anyone beat Trump in the Republican primary? Right now, it's down to basically Trump, the top of a field of contenders. And then you have a distant second, former South Carolina governor and UN Ambassador Nikki Haley. And in third place, Florida governor Ron DeSantis, with some also rans like Chris Christie and Vivek Ramaswamy, who don't really have a chance. Of that bunch, Haley is probably best positioned to make a deep run into the primaries because of her ability to consolidate the fundraising apparatus behind her in the last several months. DeSantis could still come on strong with a strong showing in Iowa, but it's really going to take a lot of money to last through the March Super Tuesday caucuses. And right now, Haley looks like the best bet. But to get there, she's going to need to win a state. Right now, she's behind in Iowa. She's close, but still behind in New Hampshire. And she’s still behind in her home state of South Carolina. So the thing to watch for is field consolidation in late January, maybe early February, And if Haley can actually get some momentum to beat Trump.
The second thing to pay attention to are Trump's criminal trials. And a major question for 2024 is how much do these things hurt him on the campaign trail? Certainly being prosecuted by the Democratic prosecutor in Manhattan and Biden's DOJ has helped Trump consolidate his position on top of the Republican field. But it seems like the conventional wisdom is that it probably hurts Trump in the general election. Now, this may or may not be true. Voters already have been accustomed to the fact that Trump's been accused of various crimes. Trump himself is running on delegitimizing the system that's put him on trial, and that's going to be a continued theme throughout 2024. And the question for the general election is right now, Trump is beating Biden in head to head polling matchups, which are not very reliable this far out. Does that advantage start to erode as Trump's criminal trial stay in the news throughout the summer? And what happens if he's eventually convicted of a crime? And the one to watch is probably the DC election interference case that the federal government has brought in the District of Columbia.
Final thing to watch for in 2024, what happens to the state of the economy? Biden's approval ratings are relatively low for an incumbent seeking reelection in the high thirties. That's a pretty bad sign. The economy's been fairly resilient so far with low unemployment and decent wage growth. But Americans are still saying they're very unhappy about the state of things. Inflation has been a huge part of that. High grocery prices, expensive services are all things that Americans are dealing with on a day to day basis. Does the economy flatline or tank in the first half of 2024, which would be a real disaster for the incumbent President Biden? Or does it continue to muddle along and potentially improve as inflation fades in the rearview mirror, which would be a tailwind for the incumbent? And you'd expect to see that in rising approval ratings throughout the spring and summer.
Thanks for watching. This has been US Politics in (a little over) 60 Seconds.