Sad how many will actually blindly believe the ad
without fact checking - here is a summarization:
“Their ‘Bidenomics’ led to the highest inflation in 40
years. Highest gas prices ever. Skyrocketing interest
rates. Unaffordable housing. Incomes down. Unemployment
rising. And a recession now headed our way. Yet Kamala
Harris is clueless.”
— Trump campaign ad, “Clueless,” released Sept. 23"
"“Their ‘Bidenomics’ led to the highest inflation in 40
years.”
Inflation, as measured by the year-over-year percentage
change in the consumer price index, spiked to a 9
percent annual rate in June 2022. That was the highest
level in 43 years. But that was also two years ago.
Inflation, as of August, has fallen to 2.53 percent.
That’s similar to the inflation rate (2.49 percent) in
January 2020, when Trump was president and before the
pandemic.
Moreover, pinning the blame just on President Joe Biden
and Harris is misplaced. Inflation initially rose
because of pandemic-related shocks: increased consumer
demand as the coronavirus pandemic eased, and an
inability to meet this demand because of supply chain
issues, as companies had reduced production when
consumers hunkered down during the pandemic. Inflation
climbed everywhere — with many peer countries doing
worse than the United States — because of pandemic-
related shocks that rippled across the globe.
An influential 2023 paper written by Olivier J.
Blanchard, former chief economist of the International
Monetary Fund, and Ben S. Bernanke, former chair of the
Federal Reserve, pinned the blame for inflation on the
pandemic. But they also concluded that inflation stayed
high because of low interest rates and the impact of
stimulus programs passed under both Trump and Biden
that put dollars in people’s pockets and spurred some
of that demand. Biden’s $1.9 trillion stimulus bill,
passed in early 2021, might have especially fueled
spending — as some economists, including Blanchard,
warned at the time it would.
The final event that pushed inflation to 9 percent was
Russia’s invasion of Ukraine in February 2022, which
sent energy prices skyrocketing.
“Highest gas prices ever.”
The Russia-Ukraine war pushed gasoline prices higher —
two years ago. What was once $5 a gallon gasoline is
now closer to $3, depending on state and local taxes.
On an inflation-adjusted basis, gasoline prices were
not the highest ever in 2022. Gasoline was more
expensive in the early 2010s, 2008, 1981 and many years
before World War II.
“Skyrocketing interest rates.”
The Federal Reserve, which is independent of the White
House, boosted interest rates to combat inflation. The
Fed Fund target rate was raised to as high as 5.5
percent, the highest since 1999-2000, when the Fed
raised the rate to 6.5 percent over concerns that a
frenzy in internet and technology stocks might spark
inflation.
But, as noted, the Fed believes the program has been a
success and is now reducing interest rates. It’s worth
noting that Biden has never publicly complained about
the Fed’s actions — and Harris has pledged to respect
the Fed’s independence. Trump has made no such promise,
and when he was president he criticized the Fed for
“ridiculous policies.” He wanted rates kept low — which
can be inflationary.
“Unaffordable housing.”
This line cites a New York Post article from June 2023
that references a spike in home mortgage rates because
of the Fed’s actions. When the article was written, 30-
year mortgage rates were 6.7 percent. They have now
fallen to 6.08 percent, which is still the highest
since 2008.
Housing affordability is an important issue, which is
one reason Harris had proposed building 3 million new
homes and offering up to $25,000 in down payment
assistance for first-generation home buyers. Trump has
promoted the deportation of millions of undocumented
immigrants as a way to reduce competition for housing.
“Incomes down.”
The ad cites a Wall Street Journal article from 2023 on
the Census Bureau reporting that household incomes had
fallen for three straight years. (This included one
year of Trump’s term, 2020, and the first two years of
Biden’s term, 2021-2022.)
But on Sept. 10, two weeks before the ad was released,
the Census Bureau reported that real median household
income rose four percent in 2023, to $80,610, the first
increase since 2019. The ad ignores this positive news
and instead displays text: “Americans’ incomes down
three straight years.” That leaves the misleading
impression that the decline happened in all three years
of Biden’s presidency.
“Unemployment rising.”
This line is especially rich. The unemployment rate in
August was 4.2 percent — near historic lows. But it is
up slightly from 3.4 percent in January 2023, which was
the lowest unemployment rate in 70 years.
“And a recession now headed our way.”
The Trump campaign sees a recession on the horizon. As
noted above, the Fed chairman thinks there is little
risk of that, though of course it’s always possible.
Most economists say the combination of fiscal and
monetary policy has cooled inflation without causing a
recession — the best possible outcome.
What’s the source cited for this line? Another old
article, from last November, in the Economist magazine.
The headline was: “America may soon be in recession,
according to a famous rule. But is it right?”
The article provided a technical explanation of the
Sahm rule, named after former Federal Reserve economist
Claudia Sahm. The rule says a recession is likely if
the unemployment rate, based on a three-month average,
is a half percentage point above its lowest point over
the past 12 months. But the article notes that the
post-pandemic economy made the rule less relevant.
Sahm agrees. “A recession is not imminent, even though
the Sahm rule is close to triggering,” she wrote in
July.
“Bidenomics hits families with a $5,600 pay cut”
This text appears as the voice-over says Harris is
clueless. This is another out-of-date figure that we
have dissected before — in 2023. It depends on an
analysis of weekly wage gains, adjusted for inflation.
The problem with this metric is that weekly wages
spiked in certain months during the pandemic — both
because of stimulus payments and also because millions
of low-wage workers lost their jobs, changing the mix
of workers. Thus, using January 2021 as a starting
point gives a misleading picture.
If the starting point is February 2020, before the
pandemic tanked the economy, inflation-adjusted weekly
wages and hourly wages both show modest income gains
for Americans. Another metric — real disposable
personal income per capita — shows a five percent
increase in income though July.
The Pinocchio Test
This ad is stuck in the time warp. The Trump campaign
may wish it was still running in 2022 and 2023, when
the economic numbers were grimmer for Democrats. But
that’s no excuse for pretending the situation has not
improved significantly in the past year. Otherwise, the
Federal Reserve would not be cutting interest rates.
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