Election campaign 2024 is a complicated picture

“It’s the economy, stupid!”

James Carville’s iconic sign in Bill Clinton’s campaign headquarters reminded every member of the team what the key issue in the 1992 election campaign would be.

President George H.W. Bush had to defend an economy that had slipped into recession and, despite a recovery, an unemployment rate that peaked at 7.5 percent. President Bush did not win a second term.

In this election, the top issue is inflation/prices. Since February 2021 prices have increased about 20%, particularly food, energy and housing costs that provide American consumers with a daily reminder.

The reasons are many and varied — there were supply chain problems, labor shortages drove up wages, the Ukraine war impacted food and energy prices, avian flu affected egg prices, there were bipartisan pandemic stimulus packages and the Fed juiced the economy.

Housing shortages and higher interest rates drove up rents and mortgage costs, OPEC decisions pushed up oil prices, and many believe corporations took advantage of economic turbulence to raise prices excessively.

Given that, are the higher prices the fault of the Biden-Harris administration? Does it get credit for prices coming down? Does Congress, which has the power of the purse, share any blame/credit?

And, while we are asking questions, how much influence do presidents actually have over our $29 trillion economy? Presidents don’t set interest rates — that’s the Fed’s job.

To most American voters, these questions don’t matter. When the U.S. economy is strong presidents benefit and claim credit. When the economy is weak, they get the blame and they try to deflect. Whether that is fair or not is immaterial. It is the reality.

Prior to President Biden’s departure from the race, polls showed voters judged that former President Trump would do a better job with the economy. Now some polls give a slight edge to Vice President Harris.

For Trump, there is a bit of nostalgia at work. The U.S. economy, from January 2017 until the onset of the pandemic, was quite strong — 2.7% annual growth (after inflation), partially boosted by a large tax cut. Mortgage rates were low as was unemployment. Many voters today say the economy was better under Trump.

Interestingly, economic growth has been a bit stronger (3.4%) under Biden, but the growth has been accompanied by the strongest burst of inflation in decades.

President Biden has claimed credit for the millions of jobs created during his term, argued that prices are coming down and that America’s economy remains the envy of the world. His signature legislation — chips, infrastructure and green energy — are just starting to have an impact.

Meanwhile, both the Trump and Biden administrations have overseen the addition of more than $7 trillion — each — to our deficit, with the pandemic playing an outsized role.

So, will Biden’s economic record stick to Vice President Harris? Either she was the co-architect, or she didn’t do anything as vice president. It can’t be both

Interestingly, a 2016 study in the American Economic Review looked at the U.S. economy from the Truman administration onward and found that by any measure, the American economy has performed better under Democratic administrations.

Yet, over decades, Americans have said they believe Republicans would do a better job with the economy. The GOP has traditionally been seen as the business-oriented and more fiscally responsible party.

Despite recent volatility in the stock market, economists will tell you that the American economy remains strong and has a good chance of achieving that sought after soft landing. Yet a majority of Americans, without evidence, say that the economy is in recession.

This is the complicated picture as the election heads into the home stretch. What should matter are the proposed policies, and in the coming weeks, I’ll describe those.

• Keith Peterson, of Lake Barrington, served 29 years as a press and cultural officer for the United States Information Agency and Department of State. He was chief editorial writer of the Daily Herald 1984-86. His new book “American Dreams: The Story of the Cyprus Fulbright Commission” is available from Amazon.com.