The White House had a lot to celebrate on Wednesday.
The latest consumer price index report showed the annual rate of inflation had plummeted to 3% over the past year through June, just a third of its 2022 summertime peak. It also found wages now significantly outpace inflation for the first time since March 2021, which has been a persistent stick in the mud for Democrats arguing the economy was in better shape than it appeared.
White House officials and Democratic allies are growing more confident that “Bidenomics” is a winning pitch to voters as the rapid price increases of the past two years fade into the rearview mirror. They’re even starting to roll out some “I told you so’s,” with comments rebuking naysayers who predicted large spikes in unemployment were necessary to tame inflation.
“Despite repeated forecasts that recession is just around the corner, the U.S. recovery is solid, and inflation is down,” National Economic Council Director Lael Brainard said in a speech at the Economic Club of New York. “The economy is defying predictions that inflation would not fall absent significant job destruction.”
Even some prominent inflation hawks are starting to believe that the worst might be over. “I’m definitely more encouraged than I was a few months ago,” Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, told Semafor. “I’m more encouraged that we can land the plane without a recession.”
The inflation report — if the current trend continues — could be a turning point in how Democrats talk about the economy. Some prominent figures are already urging the party to start claiming credit for pumping federal cash into economic sectors like physical infrastructure, clean energy and domestic manufacturing.
“Bidenomics is not an abstraction for debating in the academic world, it’s real and on the ground,” Sen. Elizabeth Warren, D-Mass. told Semafor. “We learned that inflation has come down even more and that wages are now growing faster than the rate of inflation. That’s a real plus. So over time, that’s going to be another piece of Bidenomics to talk about.”
The hope is that even the much-maligned $1.9 trillion American Rescue Plan follows a similar path to the Affordable Care Act, which was politically damaging to Democrats in the short-term but proved beneficial over the long-term. Though the ARP contributed to overheating the economy, it’s also increasingly being credited with putting the US ahead of other G7 countries dealing with lackluster recoveries after the pandemic.
“The countries that put less money into the recovery are still struggling,” Warren said. “Big stimulus works to combat a big problem, that has to be part of the message.”
Not everyone is going to frame it as “Bidenomics” or a high-minded theory about how the economy should operate, especially in states where the president is a drag.
“I couldn’t even tell you what Bidenomics means, but what I can tell you is the inflation rate’s low,” said Sen. Jon Tester, D-Mont., who’s up for re-election in his deep-red state next year. He called Tuesday’s report “rippin’ good.”
While the party survived the 2022 midterms with inflation much closer to its peak, it’s still a long way from beating back the issue. Democrats said they planned to emphasize tangible benefits to counter polling that shows voters are still deeply sour on the economy and skeptical of the party’s record.
“Everywhere I go, it’s an infrastructure project, it’s a manufacturing investment,” said Sen. Tim Kaine, D-Va.
Or, as Tester put it: “I’m going to talk about building bridges and roads and broadband and all that good shit.”
At the same time, vulnerable members face headwinds this cycle and some are reluctant to get too ahead of voters. Democrats who spoke to Semafor often couched their remarks with caveats that things weren’t perfect, workers were still hurting, and other economic issues still needed to be addressed.
“It’s moving in the right direction, but we still got more work to do to lower costs,” Sen. Bob Casey, D-Pa. said.
Room for Disagreement
Economists may be celebrating a rapid decline in the rate of inflation, but voters may not be so quick to forget the increases that have already been priced in.
“Reminder: Prices are still *significantly* above January 20, 2021 levels,” Republican pollster Patrick Ruffini said on Twitter. He noted that surveys show voters remain just as worried about cost-of-living issues, even as inflation has been leveling off for months.
Some commentators argue Biden is positioning himself as the politician who delivered on Donald Trump’s populist promises for workers. “Biden has co-opted the best of Trump’s ideas and pursued them with a diligence and focus that Trump never did,” Ezra Klein wrote in The New York Times. “But that won’t mean much if voters still find themselves yearning for Trump’s economy.”