April 12, 2024: What hath Biden(omics) wrought?

In which, the economy just won’t cooperate with the election cycle and the voters may be cooperating even less… but they’re not as rascally as those darn whistleblowers.

Typically, I try to either lead with international events and/or downplay domestic politics since that’s something like 95% of American media coverage. But sometimes, the weekly news cycle stacks up differently, so this Weekly Brief leads with domestic news. Onwards!

What hath Biden(omics) wrought?

A couple of weeks ago, I noted that the Biden team, and Democrats more broadly, were quietly phasing out the term “Bidenomics” because it wasn’t getting traction with voters. More specifically, it was turning into its own punchline as the “good” economic news too often reflected macro economic gains at the expense of that middle class President Biden is so sure he’s getting a good deal for.

This week’s economic news underscores why “Bidenomics” is not going to be part of Biden’s reelection pitch, but it will be part of Trump’s.

The week started with another good monthly jobs report and markets had recovered from the prior week’s slide on the belief that June interest rate cuts were in the offing. Things were rosy indeed. But there were two important data points underlying those economic good vibes: 1) the jobs report was significantly helped by public sector (aka “government”) jobs (in addition to other bad news); and 2) federal dollars were not being distributed evenly or efficiently… unless your metric for distribution was reelection, that is.

In other words, the “growth” that’s being celebrated as the success of “Bidenomics” is being driven by government expansion and financed by debt. 

Maybe… juuuuuuuuust maybe that’s why the much anticipated core inflation report did not deliver. Inflation ticked up. Again. Sticky as ever, the disheartening inflation numbers sent the stock market back down and had Jerome Powell once again indicating that interest rates aren’t coming down anytime soon. In fact, they may even go up.

The problem, though, is that every point the interest rate ticks up adds billions to America’s interest on the national debt, which forces some pretty difficult choices: cut spending and/or add to the debt to pay the debt. 

So, President Biden now finds himself in an economic and political bind of his own making: the inflation his domestic programs and policies have contributed to necessitate the Fed keeping rates where they are (if not increasing them), which in turn creates more difficult political tradeoffs in budget battles with Congress. Not the best time to try to buy an election with public funds…