Since peaking at $5 per gallon in June, gasoline prices have gone President Biden’s way. The sharp drop in prices since then, as much as $3.80 per gallon, has spelled doom for Biden and his Democrats in power.
But the Biden team looks set to lose control of Congress in the Nov. midterm elections. 8 however. The Supreme Court’s gutting of Roe v. Wade’s impeachment in June should be a game-changer for Democrats that will lead to a turnout of angry voters desperate for a Democratic Congress to undermine a new, conservative court. In recent weeks, however, abortion has declined as a ballot issue, driven out by the old stalwart, the rich, the idiot.
A new study by Moody’s Analytics singled out real disposable income and adjusted housing prices as the two economic indicators that best predict the future of political parties in the midterm elections. House rules should be a Democratic advantage. The price is higher 13% year over year, while inflation is 8.2%, because of a real, inflation-adjusted value of around 5%. That would usually be good news for those in power.
[Are you voting Republican because of the economy? Tell us why.]
But the COVID-related recession is undermining the gains of the hot real estate market for incumbent Democrats. As demand for real estate continues to rise in 2020 and 2021, rising prices have become a headwind for sellers and owners. However, buyers faced a shock, selling many people at high prices. Now they are getting whiplash as the Fed raises interest rates, to fight inflation. Rising inflation and high prices have resulted in a financial crisis, with the Oxford Economics home-competibility index at its worst level since 2007, which was the peak of the last housing bubble. A terrible housing market discourages voters, instead of reassuring them.
As for real money, by some standards, it’s close to a record low. Real income is down 4.5% from a year ago, on schedule, according to official data. The quarterly return in 1970 was a 3.1% gain. So this is a pain point for consumers now. This chart tells the story:
To understand what is happening with the income, ignore the reduction and the unprecedented reduction that happened in 2020 and 2021, as the workers were overwhelmed with the workers, and returned. Instead, take note of where real money has come in as the labor market has returned to normal. Real incomes are falling more than at any time in the past 60 years, including periods in the 1970s and early 1980s when inflation was higher than it is now. Fees will come to a price over time, but for now, the average employee is falling behind.
This is another way to see the problem for the Democrats. For Yahoo Finance’s Bidennomics Report Card, we track real income and five other economic metrics under Biden, compared to previous presidents and Jimmy Carter in the 1970s during the same term as president. them. Biden gets high marks for job creation, but he gets the lowest marks among the eight leaders for average hourly earnings. Again, that’s because inflation is higher than wage growth, which erodes a worker’s purchasing power.
High gas prices aren’t America’s biggest problem
Biden focused on the price of gasoline, announcing recently, for example, that the government will continue to release oil from the reserve plan until December, to help reduce prices. Biden’s approval rating dropped as gas prices rose to new highs earlier this year, then improved as gas prices fell.
But voters are more concerned about the economy than gas prices, as they should be: Housing and food costs account for a larger portion of the typical household budget than gasoline. Food prices are rising 13% per year. Home prices are up 8%. The income is only 5%. Paying doesn’t keep pace with price increases.
Although voters have shown little concern about gas prices in the past few weeks, they remain fearful about the economy as a whole. “Americans’ opinion of the nation’s economy remains negative,” Pew Research reported on Oct. 20, and its latest poll shows 82% of voters consider the economy as poor or fair. Only 17% say the economy is good or good. Seventy-three percent say they worry about food prices, slightly more than the 69% who worry about fuel prices.
Gallup polls have shown that the economy is the most important voting issue, by far, all year. But there has been little change in inflation concerns, even as gas prices have fallen. In May and June, 18% of voters said inflation was their biggest concern. In September, it was 17%, which is a small increase. Falling gas prices have not convinced anyone that prices in general are falling. The share that says abortion is the most important issue, however, is only 4% – down from 8% in July.
There probably isn’t much else Biden could have done in the past few months to fight food prices or other inflation-related issues that have swayed voters. The president’s job is to start with, and it is the job of the Federal Reserve to regulate inflation through monetary policy. Rising food prices will do the job, eventually. But it will come in time to help the Democrats retain power in 2022. By 2024, maybe.
Rick Newman is a columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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