Presidential Election of 2024

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    The Stock and Bond Markets Are Getting Ahead of the Fed.

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    Stock and bond markets have been rallying in anticipation of Federal Reserve rate cuts. But don’t get swept away just yet, our columnist says.It’s too early to start celebrating. That’s the Federal Reserve’s sober message — though given half a chance, the markets won’t heed it.In a news conference on Wednesday, and in written statements after its latest policymaking meeting, the Fed did what it could to restrain Wall Street’s enthusiasm.“It’s far too early to declare victory and there are certainly risks” still facing the economy, Jerome H. Powell, the Fed chair, said. But stocks shot higher anyway, with the S&P 500 on the verge of a new record.The Fed indicated that it was too early to count on a “soft landing” for the economy — a reduction in inflation without a recession — though that is increasingly the Wall Street consensus. An early decline in the federal funds rate, the benchmark short-term rate that the Fed controls directly, isn’t a sure thing, either, though Mr. Powell said the Fed has begun discussing rate cuts, and the markets are, increasingly, counting on them.The markets have been climbing since July — and have been positively buoyant since late October — on the assumption that truly good times are in the offing. That may turn out to be a correct assumption — one that could be helpful to President Biden and the rest of the Democratic Party in the 2024 elections.But if you were looking for certainty about a joyful 2024, the Fed didn’t provide it in this week’s meeting. Instead, it went out of its way to say that it is positioning itself for maximum flexibility. Prudent investors may want to do the same.Reasons for OptimismOn Wednesday, the Fed said it would leave the federal funds rate where it stands now, at about 5.3 percent. That’s roughly 5 full percentage points higher than it was in early in 2022. Inflation, the glaring economic problem at the start of the year, has dropped sharply thanks, in part, to those steep interest rate increases. The Consumer Price Index rose 3.1 percent in the year through November. That was still substantially above the Fed’s target of 2 percent, but way below the inflation peak of 9.1 percent in June 2022. And because inflation has been dropping, a virtuous cycle has developed, from the Fed’s standpoint. With the federal funds rate substantially above the inflation rate, the real interest rate has been rising since July, without the Fed needing to take direct action.But Mr. Powell says rates need to be “sufficiently restrictive” to ensure that inflation doesn’t surge again. And, he cautioned, “We will need to see further evidence to have confidence that inflation is moving toward our goal.”The wonderful thing about the Fed’s interest rate tightening so far is that it has not set off a sharp increase in unemployment. The latest figures show the unemployment rate was a mere 3.7 percent in November. On a historical basis, that’s an extraordinarily low rate, and one that has been associated with a robust economy, not a weak one. Economic growth accelerated in the three months through September (the third quarter), with gross domestic product climbing at a 4.9 percent annual rate. That doesn’t look at all like the recession that had been widely anticipated a year ago.To the contrary, with indicators of robust economic growth like these, it’s no wonder that longer-term interest rates in the bond market have been dropping in anticipation of Fed rate cuts. The federal funds futures market on Wednesday forecast federal funds cuts beginning in March. By the end of 2024, the futures market expected the federal funds rate to fall to below 4 percent.But on Wednesday, the Fed forecast a slower and more modest decline, bringing the rate to about 4.6 percent.Too Soon to RelaxSeveral other indicators are less positive than the markets have been. The pattern of Treasury rates known as the yield curve has been predicting a recession since Nov. 8, 2022. Short-term rates — specifically, for three-month Treasuries — are higher than those of longer duration — particularly, for 10-year Treasuries. In financial jargon, this is an “inverted yield curve,” and it often forecasts a recession.Another well-tested economic indicator has been flashing recession warnings, too. The Leading Economic Indicators, an index formulated by the Conference Board, an independent business think tank, is “signaling recession in the near term,” Justyna Zabinska-La Monica, a senior manager at the Conference Board, said in a statement.The consensus of economists measured in independent surveys by Bloomberg and Blue Chip Economic Indicators no longer forecasts a recession in the next 12 months — reversing the view that prevailed earlier this year. But more than 30 percent of economists in the Bloomberg survey and fully 47 percent of those in the Blue Chip Economic Indicators disagree, and take the view that a recession in the next year will, in fact, happen.While economic growth, as measured by gross domestic product, has been surging, early data show that it is slowing markedly, as the bite of high interest rates gradually does its damage to consumers, small businesses, the housing market and more.Over the last two years, fiscal stimulus from residual pandemic aid and from deficit spending has countered the restrictive efforts of monetary policy. Consumers have been spending resolutely at stores and restaurants, helping to stave off an economic slowdown.Even so, a parallel measurement of economic growth — gross domestic income — has been running at a much lower rate than G.D.P. over the last year. Gross domestic income has sometimes been more reliable over the short term in measuring slowdowns. Ultimately, the two measures will be reconciled, but in which direction won’t be known for months.The MarketsThe stock and bond markets are more than eager for an end to monetary belt-tightening.Already, the U.S. stock market has fought its way upward this year and is nearly back to its peak of January 2022. And after the worst year in modern times for bonds in 2022, market returns for the year are now positive for the investment-grade bond funds — tracking the benchmark Bloomberg U.S. Aggregate Bond Index — that are part of core investment portfolios.But based on corporate profits and revenues, prices are stretched for U.S. stocks, and bond market yields reflect a consensus view that a soft landing for the economy is a near-certain thing.Those market movements may be fully justified. But they imply a near-perfect, Goldilocks economy: Inflation will keep declining, enabling the Fed to cut interest rates early enough to prevent an economic calamity.But excessive market exuberance itself could upend this outcome. Mr. Powell has spoken frequently of the tightening and loosening of financial conditions in the economy, which are partly determined by the level and direction of the stock and bond markets. Too big a rally, taking place too early, could induce the Fed to delay rate cuts.All of this will have a bearing on the elections of 2024. Prosperity tends to favor incumbents. Recessions tend to favor challengers. It’s too early to make a sure bet.Without certain knowledge, the best most investors can do is to be positioned for all eventualities. That means staying diversified, with broad holdings of stocks and bonds. Hang in, and hope for the best. More

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    Even Most Biden Voters Don’t See a Thriving Economy

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    A majority of those who backed President Biden in 2020 say today’s economy is fair or poor, ordinarily a bad omen for incumbents seeking re-election.Presidents seeking a second term have often found the public’s perception of the economy a pivotal issue. It was a boon to Ronald Reagan; it helped usher Jimmy Carter and George H.W. Bush out of the White House.Now, as President Biden looks toward a re-election campaign, there are warning signals on that front: With overall consumer sentiment at a low ebb despite solid economic data, even Democrats who supported Mr. Biden in 2020 say they’re not impressed with the economy.In a recent New York Times/Siena College poll of voters in six battleground states, 62 percent of those voters think the economy is only “fair” or “poor” (compared with 97 percent for those who voted for Donald J. Trump).What the Economy Looks Like to Biden Voters in Swing StatesPercent of President Biden’s 2020 supporters who …

    Notes: Respondents of other races were omitted because of low sample sizes. The figures may not add up to 100 percent because of rounding.Source: New York Times/Siena College polls of 3,662 registered voters conducted Oct. 22 to Nov. 3 in Arizona, Georgia, Michigan, Nevada, Pennsylvania and WisconsinBy The New York TimesThe demographics of Mr. Biden’s 2020 supporters may explain part of his challenge now: They were on balance younger, had lower incomes and were more racially diverse than Mr. Trump’s. Those groups tend to be hit hardest by inflation, which has yet to return to 2020 levels, and high interest rates, which have frustrated first-time home buyers and drained the finances of those dependent on credit.But if the election were held today, and the options were Mr. Biden and Mr. Trump, it’s not clear whether voter perceptions of the economy would tip the balance.“The last midterm was an abortion election,” said Joshua Doss, an analyst at the public opinion research firm HIT Strategies, referring to the 2022 voting that followed the Supreme Court’s decision to overturn the Roe v. Wade ruling. “Most of the time, elections are about ‘it’s the economy, stupid.’ Republicans lost that because of Roe. So we’re definitely in uncharted territory.”There are things working in Mr. Biden’s favor. First, Mr. Doss said, the economic programs enacted under the Biden administration remain broadly popular, providing a political foundation for Mr. Biden to build on. And second, social issues — which lifted the Democrats in the midterms — remain a prominent concern.Take Oscar Nuñez, 27, a server at a restaurant in Las Vegas. Foot traffic has been much slower than usual for this time of year, eating into his tips. He’d like to start his own business, but with the rising cost of living, he and his wife — who works at home answering questions from independent contractors for her employer — haven’t managed to save much money. It’s also a tough jump to make when the economy feels shaky.Mr. Nuñez expected better from Mr. Biden when he voted blue in 2020, he said, but he wasn’t sure what specifically the president should have done better. And he is pretty sure another Trump term would be a disaster.“I’d prefer another option, but it seems like it will once again be my only option again,” Mr. Nuñez said of Mr. Biden. For him, immigrants’ rights and foreign policy concerns are more important. “That’s why I was picking him over Trump in the first place — because this guy’s going to do something that’s real dangerous at some point.”Mr. Nuñez isn’t alone in feeling dissatisfied with the economy but still bound to Mr. Biden by other priorities. Of those surveyed in the six battleground states who plan to vote for Mr. Biden in 2024, 47 percent say social issues are more important to them, while 42 percent say the economy is more important — but that’s a closer split than in the 2022 midterms, in which social issues decisively outweighed economic concerns among Democratic voters in several swing states. (Among likely Trump voters, 71 percent say they are most focused on the economy, while 15 percent favor social issues.)Kendra McDowell thinks President Biden is doing the best he can given the continuing challenges of the wars in Ukraine and Gaza. “People are shopping — you know why? Because they’ve got jobs,” she said.Hannah Yoon for The New York TimesDour sentiment about the economy also isn’t limited to people who’ve been frustrated in their financial ambitions.Mackenzie Kiser, 20, and Lawson Millwood, 21, students at the University of North Georgia, managed to buy a house this year. Mr. Millwood’s income as an information-technology systems administrator at the university was enough to qualify, and they worried that affordability would only worsen if they waited because of rising interest rates and prices. Still, the experience left a bitter taste.“The housing market is absolutely insane,” said Ms. Kiser, who wasn’t old enough to vote in 2020 but leans progressive. “We paid the same for our one-story, one-bedroom cinder-block 1950s house as my mom paid for her three-story, four-bedroom house less than a decade ago.”Ms. Kiser doesn’t think Mr. Biden has done much to help the economy, and she worries he’s too old to be effective. But Mr. Trump isn’t more appealing on that front.“It’s not that I think that anybody of a different party could do better, but more that someone with their mental faculties who’s not retirement age could do a better job,” Ms. Kiser said. “Our choices are retirement age or retirement age, so it’s rock and a hard place right now.”Generally, voters don’t think Republicans are fixing the economy, either. In a poll conducted this month by the progressive-leaning Navigator Research, 70 percent of voters in battleground House districts, including a majority of Republicans, said they thought Republicans were more focused on issues other than the economy.The health of the economy is still a major variable leading up to the election. A downturn could fray what the president cites as a signal accomplishment of Bidenomics: low unemployment. A study of the 2016 election found that higher localized unemployment made Black voters, an overwhelmingly Democratic constituency, less likely to vote at all.“I think the likelihood that they would choose Trump is not the threat,” Mr. Doss said. “The threat is that they would choose the couch and stay home, and enough of them would stay home for an electoral college win for Trump.”But in the absence of a competitive Democratic primary, the campaigning — and television spots — have yet to commence in earnest. When they do, Mr. Doss has some ideas.So far, Mr. Biden’s messaging has focused on macroeconomic indicators like the unemployment rate and tackling inflation. “The truth is, that’s not the economy to most people,” Mr. Doss said. “The economy to most people is gas prices and food and whether or not they can afford to throw a birthday party for their kid.”Mr. Millwood supports a higher federal minimum wage, and is impatient with the bickering and finger pointing he hears about in Washington.Audra Melton for The New York TimesIt’s difficult for presidents to directly control inflation in the short term. But the White House has addressed a few specific costs that matter for families, by releasing oil from the Strategic Petroleum Reserve to contain surging oil prices in late 2022, for example. The Inflation Reduction Act reduced prescription drug prices under Medicare and capped the cost of insulin for people with diabetes. The administration is also going after what it calls “junk fees,” which inflate the prices of things like concert tickets, airline tickets and even birthday parties.The more the administration talks about its concrete efforts to lower prices, the more Mr. Biden will benefit, Mr. Doss said. At the same time, Mr. Biden can lessen the blowback from persistent inflation by deflecting blame — an out-of-control pandemic was the original cause, he could plausibly argue, and most other wealthy countries are worse off.That’s how it seems to Kendra McDowell, 44, an accountant and single mother of four in Harrisburg, Pa. She feels the sting of inflation every time she goes to the grocery store — she spent $1,000 on groceries this past month and didn’t even fill her deep freezer — and in the health of her clients’ balance sheets. Despite her judgment that the economy is poor, however, she still has enough confidence to start a business in home-based care, a field in greater demand since Covid-19 ripped through nursing homes.“When I talk about the economy, it’s just inflation, and to me inflation is systemic and coming from the Trump administration,” Ms. McDowell said. If the pandemic had been contained quickly, she reasoned, supply chains and labor disruptions wouldn’t have sent prices soaring in the first place.Moreover, she sees the situation healing itself, and thinks Mr. Biden is doing the best he can given the challenges of the wars in Ukraine and now Gaza. “People are shopping — you know why? Because they’ve got jobs,” Ms. McDowell said. “God forbid, today or tomorrow, if I had to go find a job, it’s easier than it was before.”Ms. McDowell is what’s known in public opinion research as a high-information voter. Polls have shown that those less apt to stay up on the news tend to change their views when provided with more background on what the Biden administration has both accomplished and attempted.Ms. McDowell, a mother of four, said that she felt the sting of inflation every time she went to the grocery store, but that she didn’t blame Mr. Biden.Hannah Yoon for The New York TimesThe 15-month-old Inflation Reduction Act is still little known, for example. But this past March, the Yale Program on Climate Change Communication found that 68 percent of respondents supported it when filled in on its main components.A frequent theme of conversations with Democratic voters who see the economy as poor is that large corporations have too much power and that the middle class is being squeezed.Mr. Millwood, Ms. Kiser’s partner, said that he was concerned that society had grown more unequal in recent years, and that he didn’t see Mr. Biden doing much about it.“From what I see, it really doesn’t look like the working class is benefiting from many things recently,” said Mr. Millwood, who supports a higher federal minimum wage and is impatient with the bickering and finger pointing he hears about in Washington.After the phone conversation ended, Mr. Millwood texted to say that upon reflection, he would also like to see Mr. Biden push to lower taxes for low-income families and make it more difficult for the wealthiest to dodge them. After being sent news articles about Mr. Biden’s support for the extension of the now-expired Child Tax Credit and the appropriation of $80 billion for the Internal Revenue Service, in part to pursue tax evaders, he seemed surprised.“That is absolutely what I had in mind,” Mr. Millwood texted. “It’s been so noisy in the media lately I haven’t seen much that is covering things like that,” adding, “Biden doesn’t seem so bad after all haha.”Ruth Igielnik More

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    Biden Faces Economic Challenges as Cost-of-Living Despair Floods TikTok

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    Economic despair dominates social media as young people fret about the cost of living. It offers a snapshot of the challenges facing Democrats ahead of the 2024 election.Look at economic data, and you’d think that young voters would be riding high right now. Unemployment remains low. Job opportunities are plentiful. Inequality is down, wage growth is finally beating inflation, and the economy has expanded rapidly this year.Look at TikTok, and you get a very different impression — one that seems more in line with both consumer confidence data and President Biden’s performance in political polls.Several of the economy-related trends getting traction on TikTok are downright dire. The term “Silent Depression” recently spawned a spate of viral videos. Clips critical of capitalism are common. On Instagram, jokes about poor housing affordability are a genre unto themselves.Social media reflects — and is potentially fueling — a deep-seated angst about the economy that is showing up in surveys of younger consumers and political polls alike. It suggests that even as the job market booms, people are focusing on long-running issues like housing affordability as they assess the economy.The economic conversation taking place virtually may offer insight into the stark disconnect between optimistic economic data and pessimistic feelings, one that has puzzled political strategists and economists.Never before was consumer sentiment this consistently depressed when joblessness was so consistently low. And voters rate Mr. Biden badly on economic matters despite rapid growth and a strong job market. Young people are especially glum: A recent poll by The New York Times and Siena College found that 59 percent of voters under 30 rated the economy as “poor.”President Biden’s campaign is working with content creators on TikTok to “amplify a positive, affirmative message” on the economy, a deputy campaign manager said.Desiree Rios for The New York TimesThat’s where social media could offer insight. Popular interest drives what content plays well — especially on TikTok, where going viral is often the goal. The platforms are also an important disseminator of information and sentiment.“A lot of people get their information from TikTok, but even if you don’t, your friends do, so you still get looped into the echo chamber,” said Kyla Scanlon, a content creator focused on economic issues who posts carefully researched explainers across TikTok, Instagram and X.Ms. Scanlon rose to prominence in the traditional news media in part for coining and popularizing the term “vibecession” for how bad consumers felt in 2022 — but she thinks 2023 has seen further souring.“I think people have gotten angrier,” she said. “I think we’re actually in a worse vibecession now.”Surveys suggest that people in Generation Z, born after 1996, heavily get their news from social media and messaging apps. And the share of U.S. adults who turn to TikTok in particular for information has been steadily climbing. Facebook is still a bigger news source because it has more users, but about 43 percent of adults who use TikTok get news from it regularly, according to a new survey by the Pew Research Center.It is difficult to say for certain whether negative news on social media is driving bad feelings about the economy, or about the Biden administration. Data and surveys struggle to capture exactly what effect specific news delivery channels — particularly newer ones — have on people’s perceptions, said Katerina Eva Matsa, director of news and information research at the Pew Research Center.“Is the news — the way it has evolved — making people view things negatively?” she asked. It’s hard to tell, she explained, but “how you’re being bombarded, entangled in all of this information might have contributed.”More Americans on TikTok Are Going There for NewsShare of each social media site’s users who regularly get news there, 2020 vs. 2023

    Source: Pew Research Center surveys of U.S. adultsBy The New York TimesMr. Biden’s re-election campaign team is cognizant that TikTok has supplanted X, formerly known as Twitter, for many young voters as a crucial information source this election cycle — and conscious of how negative it tends to be. White House officials say that some of those messages accurately reflect the messengers’ economic experiences, but that others border on misinformation that social media platforms should be policing.Rob Flaherty, a deputy campaign manager for Mr. Biden, said the campaign was working with content creators on TikTok in an effort to “amplify a positive, affirmative message” about the economy.A few political campaign posts promoting Mr. Biden’s jobs record have managed to rack up thousands of likes. But the “Silent Depression” posts have garnered hundreds of thousands — a sign of how much negativity is winning out.In those videos, influencers compare how easy it was to get by economically in 1930 versus 2023. The videos are misleading, skimming over the crucial fact that roughly one in four adults was unemployed in 1933, compared with four in 100 today. And the data they cite are often pulled from unreliable sources.But the housing affordability trend that the videos spotlight is grounded in reality. It has gotten tougher for young people to afford a property over time. The cost of a typical house was 2.4 times the typical household income around 1940, when government data start. Today, it’s 5.8 times.Nor is it just housing that’s making young people feel they’re falling behind, if you ask Freddie Smith, a 35-year-old real estate agent in Orlando, Fla., who created one especially popular “Silent Depression” video. Recently, it is also the costs of gas, groceries, cars and rent.“I think it’s the perfect storm,” Mr. Smith said. “It’s this tug of war that millennials and Gen Z are facing right now.”Inflation has cooled notably since peaking in the summer of 2022, which the Biden administration has greeted as a victory. Still, that just means that prices are no longer climbing as rapidly. Key costs remain noticeably higher than they were just a few years ago. Groceries are far more expensive than in 2019. Gas was hovering around $2.60 a gallon at the start of 2020, for instance, but is around $3.40 now.Young Americans Are Spending More and Earning MoreIncome after taxes and expenditures for householders under 25

    Source: Bureau of Labor Statistics Consumer Expenditure Survey By The New York TimesThose higher prices do not necessarily mean people are worse off: Household incomes have also gone up, so people have more money to cover the higher costs. Consumer expenditure data suggests that people under 25 — and even 35 — have been spending a roughly equivalent or smaller share of their annual budgets on groceries and gas compared with before the pandemic, at least on average.“I think things just feel harder,” said Betsey Stevenson, a professor of public policy and economics at the University of Michigan, explaining that people have what economists call a “money illusion” and think of the value of a dollar in fixed terms.And housing has genuinely been taking up a bigger chunk of the young consumer’s budget than in the years before the pandemic, as rents, home prices and mortgage costs have all increased.Housing Is Eating Up Young People’s BudgetsShare of spending devoted to each category for people under 25

    Source: Bureau of Labor Statistics Consumer Expenditure SurveyBy The New York TimesIn addition to prices, content about student loans has taken off in TikTok conversations (#studentloans has 1.3 billion views), and many of the posts are unhappy.Mr. Biden’s student-loan initiatives have been a roller coaster for millions of young Americans. He proposed last year to cancel as much as $20,000 in debt for borrowers who earn less than $125,000 a year, a plan that was estimated to cost $400 billion over several decades, only to see the Supreme Court strike down the initiative this summer.Mr. Biden has continued to push more tailored efforts, including $127 billion in total loan forgiveness for 3.6 million borrowers. But last month, his administration also ended a pandemic freeze on loan payments that applied to all borrowers — some 40 million people.The administration has tried to inject more positive programming into the social media discussion. Mr. Biden met with about 60 TikTok creators to explain his initial student loan forgiveness plan shortly after announcing it. The campaign team also sent videos to key creators, for possible sharing, of young people crying when they learned their loans had been forgiven.The Biden campaign does not pay those creators or try to dictate what they are saying, though it does advertise on digital platforms aggressively, Mr. Flaherty said.“It needs to sound authentic,” he said. More

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    ‘Morning in America’ Eludes Biden, Despite Economic Gains

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    Seeking re-election in 1984, Ronald Reagan presided over an economy similar in many ways to today’s. But he sold a message of progress and promise.President Ronald Reagan rode a “Morning in America” message to a blowout re-election victory in 1984, based partly on warm feelings about his economic performance. Today’s economy is similar in many ways to Mr. Reagan’s as he entered that campaign, with one big difference: There is widespread voter angst over 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. Poll respondents rate the economy poorly and say they trust Mr. Trump more to fix it. That’s true even though the economy grew faster and added more jobs over the last year than forecasters expected, while inflation fell sharply from what had been a four-decade high.In public and private conversations, and in consultation with outside economists and other experts, Mr. Biden’s economic team has been consumed with that disconnect: Why do Americans remain so down on the economy when economic data are trending up?The answer is almost certainly some combination of how Americans process the economic moment and how Mr. Biden communicates about it.In both cases, the contrast with Mr. Reagan — and with the economic environment of the early 1980s — is instructive.In the fall of 1983, Mr. Reagan’s re-election was not assured. The nation 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 — nearly as much as they have risen on Mr. Biden’s watch. Translated into today’s dollars, the price of a gallon of gasoline was about $3.80, about 40 cents higher than it is now. The typical American’s wages had not increased at all during Mr. Reagan’s tenure, after adjustment for higher prices, similar to Mr. Biden’s experience.But public faith in the economy, and in Mr. Reagan’s handling of it, was significantly stronger than it is for Mr. Biden.President Ronald Reagan rode a “Morning in America” message to re-election in 1984, partly on the strength of warm feelings about his economic performance.Bettmann/Getty ImagesThe University of Michigan’s Index of Consumer Sentiment was roughly 50 percent higher under Mr. Reagan in the fall of 1983 than it is now. Polls showed his approval rating climbing, including sentiment on the economy, in a reversal from the start of the year.A year later, Mr. Reagan would air “Prouder, Stronger, Better,” a television ad 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 came to see the progress under Mr. Reagan as relief from a long, difficult period.Voter psychology is very different under Mr. Biden. The 9 percent annual inflation rate that the country experienced last year was more than triple the average rate from the end of Mr. Reagan’s time in the White House to the start of Mr. Biden’s. Those mortgage rates Mr. Reagan trumpeted? They were around 14 percent in 1984. Right now, rates are just below 8 percent. The difference is that under Mr. Reagan, rates fell, and under Mr. Biden, they’ve gone up.For Mr. Biden and his economic team, “the problem is really in the way people think about and process economic information, rather than the economic fundamentals,” said Francesco D’Acunto, an economist at Georgetown University’s McDonough School of Business who recently briefed the White House Council of Economic Advisers.Mr. D’Acunto presented slides at the White House highlighting work he and colleagues have done, drilling down into how consumers process price increases. They find that consumers’ attitudes are shaped most by the products they buy most often — like milk, gasoline, bread and beer — and not by the things they spend the most money on.They also find that unexpected price surges stick in shoppers’ minds, negatively. They linger in a way that slower-building price increases, or even prolonged 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 itself: They were accustomed to rapid price growth and grateful for improvement.One overly simplistic explanation for Mr. Biden’s woes is that voters are waiting for prices to fall back to their prepandemic levels. If that were true, Mr. Biden would almost certainly be doomed electorally. On the whole, the path of prices across American history is an upward march.But Mr. D’Acunto says his research suggests that Mr. Biden might be able to brighten voters’ moods by mounting a public persuasion campaign, focusing on prices that have begun to come down from recent highs. That includes consumer electronics like smartphones and computers, which are less expensive today than they were a year ago, on average, and which are often large-dollar purchases.For Mr. Biden and his economic team, “the problem is really in the way people think about and process economic information,” said Francesco D’Acunto, a Georgetown University economist.Desiree Rios for The New York TimesMr. Biden’s campaign recently spent $25 million on television ads to promote “Bidenomics” — a mix of the president’s blue-collar background and policy blueprint that is meant to resonate with the working class. It includes an ad focusing on a provision in the Inflation Reduction Act, which Mr. Biden signed last year, that seeks to reduce the cost of prescription drugs through Medicare. Campaign aides say it is scoring well in surveys with viewers.There is little evidence in polls that those efforts have broken through. Biden aides say they did not expect immediate results. They are testing messages, they say, including how best to talk about Mr. Biden’s economic record, as the president prepares to spend $1 billion or more in advertising before the election.Aides also insist that continued economic improvement will eventually punch through to the public. They contend that continued wage growth will restore some of the buying power Americans lost to recent inflation, and that consumers will gradually acclimate to prices that are 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’s maintaining a great job market, putting downward pressure on prices,” Jared Bernstein, the chair of the Council of Economic Advisers, said in an interview. “I understand that hasn’t reached the sentiment indexes yet. But I’m confident it will.”Some Democrats worry that Mr. Biden himself is a barrier to getting that message through, particularly to younger voters who express concerns over his age. Campaign officials say his direct appeals resonate well in tests. The Reagan comparison offers 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, components of the Michigan survey suggest that Mr. Reagan had far more success than Mr. Biden as an economic cheerleader.Mr. Reagan made a habit of both championing the economy’s performance and critiquing press coverage of its flaws. At this point in his presidency, Americans were far more likely to report hearing positive news about the economy and prices than they do under Mr. Biden. They even reported hearing better news on unemployment, at a time when the rate was near 9 percent. It is under 4 percent today.Mr. Biden has often tried to strike more of a balance between celebrating strong job growth and acknowledging the pain of high prices. He has leaned more into boosterism in recent months — as the share of Americans reporting in the Michigan index that they hear good economic news has grown. More

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    Biden to Travel to Minnesota to Highlight Rural Investments

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    The president’s push to focus attention on the domestic economy comes as his administration has been dealing with events overseas after the terrorist attacks in Israel.The White House on Wednesday will announce more than $5 billion in funding for agriculture, broadband and clean energy needs in sparsely populated parts of the country as President Biden travels to Minnesota to kick off an administration-wide tour of rural communities.The president’s efforts to focus attention on the domestic economy ahead of next year’s campaign come after three weeks in which his administration has been seized by events overseas following the terrorist attacks in Israel and the state’s subsequent military action in Gaza.The trip will take place as Mr. Biden is urging Congress to quickly pass a $105 billion funding package that includes emergency aid to Israel and Ukraine, two conflicts he has described as threats to democracy around the globe.But the president and his aides are well aware that his hopes for a second term are likely to be determined closer to home. Rural voters like the ones he will address at a corn, soybean and hog farm south of Minneapolis are increasingly voting Republican. A recent poll showed that most voters had heard little or nothing about a health care and clean energy law that is the cornerstone of Mr. Biden’s economic agenda. And the president even faces a challenge within his own party, from Representative Dean Phillips of Minnesota, who announced his long-shot presidential bid last week.Karine Jean-Pierre, the White House press secretary, declined on Tuesday to speak about campaign issues, citing the Hatch Act, which limits political activity by federal officials, but said that Mr. Biden “loves Minnesota.” Administration officials have said Mr. Biden’s trip was planned before Mr. Phillips announced his candidacy.The White House has called the next two weeks of events the “Investing in Rural America Event Series.” It includes more than a dozen trips by Mr. Biden as well as cabinet secretaries and other senior administration officials. The White House said in a statement that the tour would highlight federal investments that “are bringing new revenue to farms, increased economic development in rural towns and communities, and more opportunity throughout the country.”Mr. Biden will be joined on Wednesday by Tom Vilsack, the agriculture secretary. Against the backdrop of a family farm that uses techniques to make crops more resilient to climate change, they will announce $1.7 billion for farmers nationwide to adopt so-called climate-smart agriculture practices.Agriculture Secretary Tom Vilsack will join President Biden in Minnesota and later travel to Indiana, Wyoming and Colorado.Haiyun Jiang for The New York TimesOther funding announcements include $1.1 billion in loans and grants to upgrade infrastructure in rural communities; $2 billion in investments as part of a program that helps rural governments work more closely with federal agencies on economic development projects; $274 million to expand high-speed internet infrastructure; and $145 million to expand access to wind, solar and other renewable energy, according to a White House fact sheet.“Young people in rural communities shouldn’t have to leave home to find opportunity,” Neera Tanden, director of the White House Domestic Policy Council, said Tuesday on a call with reporters.She said federal investments were creating “a pathway for the next generation to keep their roots in rural America.”Gov. Tim Walz of Minnesota, a Democrat, said he expected Mr. Biden to face serious headwinds in rural communities, in large part because of inflation levels.“It is a little challenging, there’s no denying, when prices go up,” Mr. Walz said. “The politics have gotten a little angrier. I think folks are feeling a little behind.”But Mr. Walz also praised Mr. Biden for spending time in rural communities. “Democrats need to show up,” he said.Kenan Fikri, the director of research at the Economic Innovation Group, a Washington think tank, said the Biden administration had made sizable investments over the past two and a half years in agriculture, broadband and other rural priorities.“The administration has a lot to show for its economic development efforts in rural communities,” he said, but “whether voters will credit Biden for a strong economic performance is another question.”Later in the week Mr. Vilsack will travel to Indiana, Wyoming and Colorado to speak with agricultural leaders and discuss land conservation. Deb Haaland, the interior secretary, will go to her home state of New Mexico to highlight water infrastructure investments.Energy Secretary Jennifer M. Granholm will be in Arizona to talk about the electricity grid and renewable energy investment in the rural Southwest.The veterans affairs secretary, Denis McDonough, plans to visit Iowa to discuss improving access to medical care for veterans in rural areas. Isabel Guzman, who leads the Small Business Administration, will travel to Georgia to talk about loans for rural small businesses.Miguel A. Cardona, the education secretary, will go to New Hampshire to promote how community colleges help students from rural areas. Xavier Becerra, the secretary of health and human services, will be in North Carolina to talk about health care access in rural areas. More

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    U.A.W. Will Not Expand Strikes at G.M., Ford and Stellantis as Talks Progress

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    The United Automobile Workers reported improved wage offers from the automakers and a concession from General Motors on workers at battery factories.The United Automobile Workers union said on Friday that it had made progress in its negotiations with Ford Motor, General Motors and Stellantis, the parent of Chrysler, and would not expand the strikes against the companies that began three weeks ago.In an online video, the president of the union, Shawn Fain, said all three companies had significantly improved their offers to the union, including providing bigger raises and offering cost-of-living increases. In what he described as a major breakthrough, Mr. Fain said G.M. was now willing to include workers at its battery factories in the company’s national contract with the U.A.W.G.M. had previously said that it could not include those workers because they are employed by joint ventures between G.M. and battery suppliers.“Here’s the bottom line: We are winning,” said Mr. Fain, wearing a T-shirt that read, “Eat the Rich.” “We are making progress, and we are headed in the right direction.”Mr. Fain said G.M. made the concession on battery plant workers after the union had threatened to strike the company’s factory in Arlington, Texas, where it makes some of its most profitable full-size sport-utility vehicles, including the Cadillac Escalade and the Chevrolet Tahoe. The plant employs 5,300 workers.G.M. has started production at one battery plant in Ohio, and has others under construction in Tennessee and Michigan. Workers at the Ohio plant voted overwhelmingly to be represented by the U.A.W. and have been negotiating a separate contract with the joint venture, Ultium Cells, that G.M. owns with L.G. Energy Solution.Ford is building two joint-venture battery plants in Kentucky and one in Tennessee, and a fourth in Michigan that is wholly owned by Ford. Stellantis has just started building a battery plant in Indiana and is looking for a site for a second.G.M. declined to comment about battery plant workers. “Negotiations remain ongoing, and we will continue to work towards finding solutions to address outstanding issues,” the company said in a statement. “Our goal remains to reach an agreement that rewards our employees and allows G.M. to be successful into the future”Shares of the three companies jumped after Mr. Fain spoke. G.M.’s stock closed up about 2 percent, Stellantis about 3 percent and Ford about 1 percent.The strike began Sept. 15 when workers walked out of three plants in Michigan, Ohio and Missouri, each owned by one of the three companies.The stoppage was later expanded to 38 spare-parts distribution centers owned by G.M. and Stellantis, and then to a Ford plant in Chicago and another G.M. factory in Lansing, Mich. About 25,000 of the 150,000 U.A.W. members employed by the three Michigan automakers were on strike as of Friday morning.“I think this strategy of targeted strikes is working,” said Peter Berg, a professor of employment relations at Michigan State University. “It has the effect of slowly ratcheting up the cost to the companies, and they don’t know necessarily where he’s going to strike next.”Here Are the Locations Where U.A.W. Strikes Are HappeningSee where U.A.W. members are on strike at plants and distribution centers owned by Ford, General Motors and Stellantis.The contract battle has become a national political issue. President Biden visited a picket line near Detroit last month. A day later, former President Donald J. Trump spoke at a nonunion factory north of Detroit and criticized Mr. Biden and leaders of the U.A.W. Other lawmakers and candidates have voiced support for the U.A.W. or criticized the strikes.When negotiations began in July, Mr. Fain initially demanded a 40 percent increase in wages, noting that workers’ pay has not kept up with inflation over the last 15 years and that the chief executives of the three companies have seen pay increases of roughly that magnitude.The automakers, which have made near-record profits over the last 10 years, have all offered increases of slightly more than 20 percent over four years. Company executives have said anything more would threaten their ability to compete with nonunion companies like Tesla and invest in new electric vehicle models and battery factories.The union also wants to end a wage system in which newly hired workers earn just over half the top U.A.W. wage, $32 an hour now, and need to work for eight years to reach the maximum. It is also seeking cost-of-living adjustments if inflation flares, pensions for a greater number of workers, company-paid retirement health care, shorter working hours and the right to strike in response to plant closings.In separate statements, Ford and Stellantis have said they agreed to provide cost-of-living increases, shorten the time it takes for employees to reach the top wage, and several other measures the union has sought.Ford also said it was “open to the possibility of working with the U.A.W. on future battery plants in the U.S.” Its battery plants are still under construction and have not hired any production workers yet.The union is concerned that some of its members will lose their jobs, especially people who work at engine and transmission plants, as the automakers produce more electric cars and trucks. Those vehicles do not need those parts, relying instead on electric motors and batteries.Stellantis’ chief operating officer for North America, Mark Stewart, said the company and the union were “making progress, but there are gaps that still need to be closed.”The union is also pushing the companies to convert temporary workers who now make a top wage of $20 an hour into full-time staff.Striking at only select locations at all three companies is a change from the past, when the U.A.W. typically called for a strike at all locations of one company that the union had chosen as its target. Striking at only a few locations hurts the companies — the idled plants make some of their most profitable models — but limits the economic damage to the broader economies in the affected states.It also could help preserve the union’s $825 million strike fund, from which striking workers are paid while they’re off the job. The union is paying striking workers $500 a week.G.M. said this week that the first two weeks of the strike had cost it $200 million. The three automakers and some of their suppliers have said that they have had to lay off hundreds of workers because the strikes have disrupted the supply and demand for certain parts.Santul Nerkar More

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    What to Know About the Potential Autoworkers Strike

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    The union and the carmakers remain far apart on wages.The United Auto Workers union, which represents about 150,000 workers at U.S. car plants, could strike against three of the country’s largest automakers on Friday if the union and the companies are unable to reach new contracts.The three automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — could be forced to stop or slow production if an agreement isn’t reached by midnight on Thursday. The president of the U.A.W., Shawn Fain, said that Thursday was the “deadline, not a reference point.”The union is negotiating a separate four-year contract with each automaker. The U.A.W. has never struck against all three companies at once, preferring to target one at a time. But Mr. Fain has said he and his members are willing to strike against all three this time.What’s at issue in the labor dispute?Compensation is at the forefront of negotiations.The U.A.W. is demanding 40 percent wage increases over four years, which Mr. Fain says is in line with how much the salaries of the companies’ chief executives have increased in the past four years.As of last Friday, the two parties remained far apart, with the companies offering to raise pay by 14 to 16 percent over four years. Mr. Fain called that offer “insulting” and has said that the union is still seeking a 40 percent pay increase.What role is the switch to electric cars playing in the negotiations?The auto industry is in the middle of a sweeping transition to battery-powered vehicles, and G.M., Ford and Stellantis are spending billions of dollars to develop new models and build factories. The companies have said those investments make it harder for them to pay workers substantially higher wages. Automakers say they are already at a big competitive disadvantage compared with nonunion automakers like Tesla, which dominates the sale of electric vehicles.The U.A.W. is worried that the companies will use the switch to electric cars to cut jobs or hire more nonunion workers. The union wants the automakers to cover workers at the battery factories in their national contracts with the U.A.W. Right now those workers are either not represented by unions or are negotiating separate contracts. But the automakers say they cannot legally agree to that request because those plants are set up as joint ventures.What happened in the last U.A.W. strike?The U.A.W. most recently went on strike in 2019 against General Motors. Nearly 50,000 General Motors workers walked out for 40 days. The carmaker said that strike cost it $3.6 billion.The strike ended after the two sides reached a contract that ended a two-tier wage structure under which newer employees were paid a lot less than veteran workers. G.M. also agreed to pay workers more.How would a strike against the three automakers affect the economy?A long pause in car production could have ripple effects across many parts of the U.S. economy.A 10-day strike could cost the economy $5 billion, according to an estimate from Anderson Economic Group. A longer strike could start affecting inventories of cars at dealerships, pushing up the price of vehicles.The auto industry is in a more vulnerable place than it was in 2019, the last time the U.A.W. staged a strike. In the earlier part of the pandemic, car production came to a halt, sharply reducing the supply of vehicles. Domestic car inventories remain at about a quarter of where they were at the end of 2019.Will a strike have political ramifications?It definitely could.President Biden has called himself “the most pro-labor union president” and sought to solidify his ties with labor unions ahead of his re-election campaign. But the U.A.W., which usually endorses Democratic candidates including Mr. Biden in his 2020 run, has held off endorsing him for the 2024 race.The union fears that Mr. Biden’s decision to promote electric vehicles could further erode union membership in the auto industry. Mr. Fain has criticized the administration for awarding large federal incentives and loans for new factories without requiring those plants to employ union workers.Former President Donald J. Trump, who is most likely to secure the Republican nomination, has been seeking to win over U.A.W. members. He has criticized Mr. Biden’s auto and climate policies as bad for workers and consumers. More

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    UAW Standoff Poses Risk for Biden’s Electric Vehicle Commitment

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    A looming auto industry strike could test the president’s commitment to making electric vehicles a source of well-paying union jobs.President Biden has been highly attuned to the politics of electric vehicles, helping to enact billions in subsidies to create new manufacturing jobs and going out of his way to court the United Automobile Workers union.But as the union and the big U.S. automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — hurtle toward a strike deadline set for Thursday night, the political challenge posed by the industry’s transition to electric cars may be only beginning.The union, under its new president, Shawn Fain, wants workers who make electric vehicle components like batteries to benefit from the better pay and labor standards that the roughly 150,000 U.A.W. members enjoy at the three automakers. Most battery plants are not unionized.The Detroit automakers counter that these workers are typically employed in joint ventures with foreign manufacturers that the U.S. automakers don’t wholly control. The companies say that even if they could raise wages for battery workers to the rate set under their national U.A.W. contract, doing so could make them uncompetitive with nonunion rivals, like Tesla.And then there is former President Donald J. Trump, who is running to unseat Mr. Biden and has said the president’s clean energy policies are costing American jobs and raising prices for consumers.White House officials say Mr. Biden will still be able to deliver on his promise of high-quality jobs and a strong domestic electric vehicle industry.The head of the United Automobile Workers, Shawn Fain, center, wants his union’s wages and labor standards to apply to nonunion workers who make electric vehicle components.Brittany Greeson for The New York Times“The president’s policies have always been geared toward ensuring not only that our electric vehicle future was made in America with American jobs,” said Gene Sperling, Mr. Biden’s liaison to the U.A.W. and the auto industry, “but that it would promote good union jobs and a just transition” for current autoworkers whose jobs are threatened.But in public at least, the president has so far spoken only in vague terms about wages. Last month, he said that the transition to electric vehicles should enable workers to “make good wages and benefits to support their families” and that when union jobs were replaced with new jobs, they should go to union members and pay a “commensurate” wage. He is encouraging the companies and the union to keep bargaining and reach an agreement, one of Mr. Biden’s economic advisers, Jared Bernstein, told reporters on Wednesday.A strike could force Mr. Biden to be more explicit and choose between his commitment to workers and the need to broker a compromise that averts a costly long-term shutdown.“Battery workers need to be paid the same amount as U.A.W. workers at the current Big Three,” said Representative Ro Khanna, a Democrat from California who has promoted government investments in new technologies.Mr. Khanna added, “It’s how we contrast with Trump: We’re for creating good-paying manufacturing jobs across the Midwest.”At the heart of the debate is whether the shift to electric vehicles, which have fewer parts and generally require less labor to assemble than gas-powered cars, will accelerate the decline of unionized work in the industry.Foreign and domestic automakers have announced tens of thousands of new U.S.-based electric vehicle and battery jobs in response to the subsidies that Mr. Biden helped enact. But most of those jobs are not unionized, and many are in the South or West, where the U.A.W. has struggled to win over autoworkers. The union has tried and failed to organize workers at Tesla’s factory in Fremont, Calif., and Southern plants owned by Volkswagen and Nissan.A Ford Lightning plant in Dearborn, Mich. The U.A.W. worries that letting battery makers pay lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor.Brittany Greeson for The New York TimesAs a result, the union has focused its efforts on battery workers employed directly or indirectly by G.M., Ford and Stellantis. The going wage for this work tends to be far below the roughly $32 an hour that veteran U.A.W. members make under their existing contracts with three companies.Legally, employees of the three manufacturers can’t strike over the pay of battery workers employed by joint ventures. But many U.A.W. members worry that letting battery manufacturers pay far lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor, so they are seeking a large wage increase for those workers.“What we want is for the E.V. jobs to be U.A.W. jobs under our master agreements,” said Scott Houldieson, chairperson of Unite All Workers for Democracy, a group within the union that helped propel Mr. Fain to the presidency.The union’s officials have pressed the auto companies to address their concerns about battery workers before its members vote on a new contract. They say the companies can afford to pay more because they collectively earned about $250 billion in North America over the past decade, according to union estimates.But the auto companies, while acknowledging that they have been profitable in recent years, point out that the transition to electric vehicles is very expensive. Industry executives have suggested that it is hard to know how quickly consumers will embrace electric vehicles and that companies needed flexibility to adjust.Even if labor costs were not an issue, said Corey Cantor, an electric vehicle analyst at the energy research firm BloombergNEF, it could take the Big Three several years to catch up to Tesla, which makes about 60 percent of fully electric vehicles sold in the United States.A strike could force Mr. Biden to choose between his commitment to workers and the need to avert a costly shutdown of the U.S. auto industry.Bill Pugliano/Getty ImagesData from BloombergNEF show that G.M., Ford and Stellantis together sold fewer than 100,000 battery electric vehicles in the United States last year; in 2017, Tesla alone sold 50,000. It took Tesla another five years to top half a million U.S. sales. (The Big Three also sold nearly 80,000 plug-in hybrids last year.)The three established automakers had hoped to use the transition to electric cars to bring their costs more in line with their competitors, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, a research firm. If they can’t, he added, they will have to look for savings elsewhere.In a statement, Stellantis said its battery joint venture “intends to offer very competitive wages and benefits while making the health and safety of its work force a top priority.”Estimates shared by Ford put hourly labor costs, including benefits, for the three automakers in the mid-$60s, versus the mid-$50s for foreign automakers in the United States and the mid-$40s for Tesla.Ford’s chief executive, Jim Farley, said in a statement last month that the company’s offer to raise pay in the next contract was “significantly better” than what Tesla and foreign automakers paid U.S. workers. He added that Ford “will not make a deal that endangers our ability to invest, grow and share profits with our employees.”Mr. Biden and Democratic lawmakers had sought to offset this labor-cost disadvantage by providing an additional $4,500 subsidy for each electric vehicle assembled at a unionized U.S. plant, above other incentives available to electric cars. But the Senate removed that provision from the Inflation Reduction Act.Such setbacks have frustrated the U.A.W., an early backer of Mr. Biden’s clean energy plans. In May, the union, which normally supports Democratic presidential candidates, withheld its endorsement of Mr. Biden’s re-election.“The E.V. transition is at serious risk of becoming a race to the bottom,” Mr. Fain said in an internal memo. “We want to see national leadership have our back on this before we make any commitments.”The next month, Mr. Fain chided the Biden administration for awarding Ford a $9.2 billion loan to build three battery factories in Tennessee and Kentucky with no inducement for the jobs to be unionized.A BMW battery plant in South Carolina. The U.A.W. has struggled to unionize autoworkers in the South.Juan Diego Reyes for The New York TimesMr. Biden tapped Mr. Sperling, a Michigan native, to serve as the White House point person on issues related to the union and the auto industry around the same time. By late August, the Energy Department announced that it was making $12 billion in grants and loans available for investments in electric vehicles, with a priority on automakers that create or maintain good jobs in areas with a union presence.Mr. Sperling speaks regularly with both sides in the labor dispute, seeking to defuse misunderstandings before they escalate, and said the recent Energy Department funding reflected Mr. Biden’s commitment to jump-start the industry while creating good jobs.Complicating the picture for Mr. Biden is the growing chorus of Democratic politicians and liberal groups that have backed the autoworkers’ demands, even as they hail the president’s success in improving pay and labor standards in other green industries, like wind and solar.Nearly 30 Democratic senators signed a letter to auto executives this summer urging them to bring battery workers into the union’s national contract. Dozens of labor and environmental groups have signed a letter echoing the demand.The groups argue that the change would have only a modest impact on automakers’ profits because labor accounts for a relatively small portion of overall costs, a claim that some independent experts back.Yen Chen, principal economist of the Center for Automotive Research, a nonprofit group in Ann Arbor, Mich., said labor accounted for only about 5 percent of the cost of final assembly for a midsize domestic sedan based on an analysis the group ran 10 years ago. Mr. Chen said that figure was likely to be lower today, and lower still for battery assembly, which is highly automated.Beyond the economic case, however, Mr. Biden’s allies say allowing electric vehicles to drive down auto wages would be a catastrophic political mistake. Workers at the three companies are concentrated in Midwestern states that could decide the next presidential election — and, as a result, the fate of the transition to clean energy, said Jason Walsh, the executive director of the BlueGreen Alliance, a coalition of unions and environmental groups.“The economic effects of doing that are enormously harmful,” he said. “The political consequences would be disastrous.” More