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This week in Bidenomics: Kamalanomics?
If President Joe Biden steps down as this year’s Democratic presidential nominee, he will be giving an economic gift to his successor.
Biden’s economy has been great, except for one thing everyone knows about: inflation. Many Americans blame Biden for inflation, especially his Republican critics, who call it “aBidenflation.”
That’s unfair, given that inflation, which peaked at 9% in 2022, was largely driven by COVID-related distortions and tight energy markets. Biden fanned the flames a bit by signing a $2 trillion stimulus bill into law in 2021. But his predecessor, Donald Trump, signed $4 trillion of stimulus into law before him. It was the entire stimulus spurt that contributed to inflation, not just Biden’s share.
Inflation is nearly back to normal levels, and a Biden replacement would have much less to explain about the high cost of food, gasoline and rent. Biden’s departure could even turn the economy into a net winner for Democrats.
Read more: Is the inflation fever ending? Price increases in everyday expenses are finally slowing down.
Pressure on Biden, 81, to bow out appears to be intensifying rather than abating as the damage from his disastrous June 27 debate performance becomes clear. Polls show Biden losing ground to his Republican opponentTrump, with three-quarters of voters now say Biden is too old for office. Some wealthy Democratic donors are asking Biden to step down. His campaign stops are focused on damage control and demonstrating his vigor, rather than taking down a nearly as old Trump.
On a June 5 interview with ABC NewsBiden said he had only had a “bad night” during the debate, mostly because of a bad cold. He insisted he has the stamina and acuity for four more years in the White House. But the pressure to step down, if anything, it’s growing upand some Biden critics say the president is in denial about his weak public standing and the dwindling chances of defeating Trump.
The political parlor game is suddenly conjuring up a dream ticket of Democrats who could replace Biden. But Vice President Kamala Harris is the favorite by miles, given that she is already just one step away from the job. Her name is part of the Biden-Harris campaign, and she is better known nationally than any other plausible replacement.
Vice President Kamala Harris waves as she leaves after speaking at the Tribal Nations Summit in the South Court Auditorium on the White House campus, Nov. 16, 2021, in Washington. (AP Photo/Patrick Semansky, File) (ASSOCIATED PRESS)
Would voters associate Harris with inflation the way they associate her with Biden? Perhaps not. The vice presidency is a notoriously empty job that brings national fame but few responsibilities. “I am nothing,” he said John Adams, the first vice president. “But I can be anything.”
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For Harris, being Biden’s surrogate could mean a fresh start to define herself and convince voters that a new face means the era of inflation is over.
The numbers say it’s over. Inflation is now at a manageable 3.3%, while rents are rising at 3.9%, allowing workers to come out ahead. The only real inflation left is in rent and insurance. Rent inflation will likely improve because new leases are coming down from the peaks of 2022on average. Auto and home insurance inflation is an outlier, with premiums rising as insurers slowly recover from the cost increases of recent years. They, too, should stabilize eventually.
Angry shoppers correctly point out that many prices have risen and stayed high, even if the current rate of increase is small. But Harris can give voters a hint: “It’s not my fault. It was the other guy.” She would have to get the message right, but the change at the top — out with the old, in with the new — would be a chance for Democrats to reset their shaky record on inflation.
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The rest of the economy is approaching Goldilocks status. The latest jobs numbers reflect a healthy economy moving forward, with employers create solid 206,000 jobs in June. Income growth is moderate — not too hot, not too cold — which has revived hopes for Federal Reserve interest rate cuts by the fall. Other data suggest inflation is finally under control, with investors now looking to consumer price figures on July 11 to confirm the trend.
When the Fed starts cutting rates, it will be in very small increments that won’t provide an immediate benefit to borrowers. But it will signal that rates have peaked and are headed lower, making potential home and car buyers a bit more optimistic.
Read more: What the Fed Rate Decision Means for Bank Accounts, CDs, Loans, and Credit Cards
The stock market, meanwhile, is already at record highs, and the Fed’s rate cut could be a tailwind pushing stocks even higher. Normally, these would be extremely bullish signs for the party in power that is holding the White House.
Besides his age, Biden has two glaring weaknesses with voters: the economy and immigration. Biden gets poor marks on the economy largely because of inflation, and that’s mostly in the past. If Biden is also in the past, his replacement could get credit for what’s going well without the blame for what’s gone wrong. A little more trust in Democrats on the economy could offset some of the party’s weakness on immigration.
If Kamala Harris is indeed the next Democratic presidential candidate, she will still have to prove herself to voters, who will likely remember that she ran lackluster and disorganized presidential campaign against Biden and other Democrats in 2020. But she could start with some momentum thanks to the Biden economy she would inherit.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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