It's Morning in Biden's America Again

Let's consider the time 40 years ago when an aged president rode good-enough economic conditions to a landslide victory on a message of optimism.

Dear readers,

Ronald Reagan’s 1984 “Morning in America” reelection campaign ad is most remembered for the sunny, optimistic picture it painted of life under his administration.

What you may not remember is that the ad got pretty specific in its case about why you should feel good about the Reagan economy. Here’s a transcript:

It's morning again in America. Today more men and women will go to work than ever before in our country's history. With interest rates at about half the record highs of 1980, nearly 2,000 families today will buy new homes, more than at any time in the past four years. This afternoon, 6,500 young men and women will be married, and with inflation at less than half of what it was just four years ago, they can look forward with confidence to the future. It's morning again in America, and under the leadership of President Reagan, our country is prouder and stronger and better. Why would we ever want to return to where we were less than four short years ago?

The economic picture in 1984 was considerably more mixed than the ad would have you believe, or than you might infer from Reagan’s landslide reelection victory. On inflation, Reagan’s record was a clear success: CPI inflation in September 1984, the month the ad premiered, was 4.3%, down from 11.8% in January 1981, when Reagan had taken office. But unemployment was 7.3%, down just 0.2 percentage points from January 1981. Interest rates, while indeed down from their peak, were still painfully high, with an average 30-year fixed-rate mortgage running in the 14% range. And the successful war on inflation had come at a cost: a steep economic recession in 1982-83, during which unemployment had climbed nearly to 11%.

Let’s compare that situation to the one Joe Biden has presided over.

Like Reagan, Biden can proclaim a clear victory on one of the most politically important aspects of the economy. Biden’s strength is employment: Unemployment has remained below 4%, and job growth has continued at a robust pace of over 200,000 jobs a month. The rest of the Biden record is mixed. Wage growth was poor over the last two years, but it’s improved lately, and real wages are now slightly higher than they were a year ago. Inflation is elevated but not as much as it once was — if underlying trends stay as they are, it’s likely we’re going to continue to see inflation in the 4% range. Interest rates have gone up, but they may not need to go up very much more, and that realization has boosted the stock market and made it easier for consumers and businesses to borrow and invest with confidence.

Over the last few months, inflation data has gotten a bit more benign, job growth has remained strong, and the Fed has decided it can ease off on the rate hikes. The odds of a recession this year have fallen sharply. And this is producing an increasingly clear picture of the likely economic climate during which the 2024 election campaign will be fought: one of muddling through, with jobs still plentiful, inflation still somewhat elevated, interest rates not much higher than they are right now, and real income growth running significantly better than it was in 2022.

If Biden took that picture and declared it “Morning in America,” would that be any more ridiculous than Ronald Reagan having done so 40 years earlier?

President Joe Biden remarks that the desk is hot from the sun before signing an executive order that would create the White House Office of Environmental Justice, in the Rose Garden of the White House April 21, 2023 in Washington, DC.

Of course, if he does, Republicans will say Biden is out of touch with the economic concerns of real Americans. That’s what Walter Mondale said, too. The New York Times reported in November 1984:

[Mondale] went on: ''Their commercial's called the 'new morning' in America. It's all picket fences and puppy dogs. No one's hurting. No one's alone. No one's hungry. No one's unemployed. No one gets old. Everybody's happy.''

That is not the real America, said Mr. Mondale. But he said Mr. Reagan did not seem to realize that.

The truth of the economy is there’s always somebody who’s doing well and someone who’s doing badly. Loudmouth venture capitalist David Sacks says he doesn’t believe the positive economic data because “all I see is layoffs.” Well, it’s true that recent times have been rough going for the sort of venture-backed technology firms that Sacks invests in. The “information” sector of the economy, which includes media and many tech firms, has lost jobs this year. But only about 2% of American workers work in the information sector. Most Americans aren’t experiencing the economy that David Sacks experiences; they’re experiencing one that still has large net job creation.

Biden’s big economic problem going into the 2022 midterm elections was falling real incomes. Yes, it was easy to find a job; he’d have been even less popular if unemployment had been high. But most people were experiencing the fact that they couldn’t buy as much stuff with the fruits of an hour of their labor as they could before, and they were understandably unhappy about that. Since the election, that aspect of the economy has gotten better — inflation is lower, real incomes are rising again, and it’s reasonable to expect that in the coming months, public satisfaction with Biden’s handling of the economy will improve, because the share of Americans personally experiencing a satisfactory economy has been growing.

It’s worth looking back again to 1983-84 and thinking about something similar. As I said at the top, unemployment in September 1984 (7.3%) was only slightly lower than January 1981 (7.5%). But it was a lot lower than the peak of 10.8% it reached heading into 1983. Reagan led the economy into a recession, for which Republicans were severely punished in the 1982 midterm elections. Then he led it into a recovery, for which Reagan was rewarded in the 1984 election, even though unemployment had ended up right around where it was when Reagan had taken office. The key thing politically was the trend: Things were getting better, which is why the theme of the “Morning in America” ad was optimism. It wasn’t a claim that everything had been fixed, but that the outlook was good enough for people to confidently do things like buy homes and start families.

Biden won’t be seeking reelection with an economy that is excellent on all fronts. The great thing about a message of optimism is that you can use it to talk simultaneously about things that are already good (like unemployment) and things that are getting better (like inflation and real wage growth). That’s what Ronald Reagan understood in the 1984 campaign, and if economic trends continue as they are, it’s one I’d expect the president to make central in his reelection messaging.

Very seriously,

Josh