Eva Marie Uzcategui | Bloomberg | Getty Images Worries about the cost of living and the direction of the economy could prove costly for President Joe Biden and his fellow Democrats in Tuesday’s election. Recent surveys show that consumer sentiment has risen only modestly and remains much lower than a year ago, when concerns about inflation first began to grip policymakers, shoppers and business executives. A report released Friday outlined the problem for Washington’s current ruling party. The University of Michigan, which releases a closely watched sentiment survey every month, asked respondents who they trusted most when it came to the economy and who would be best for personal finances. The result: overwhelmingly Republican. The survey of 1,201 respondents saw Republicans with a 37%-21% advantage on the question of which party is better for the economy. While this left a wide range – 37% – of consumers who think it doesn’t make a difference, the difference between those who prefer it is huge. (The survey did not distinguish whether respondents were likely voters.) In fact, among all demographics, the only pro-Democrats was the single party group. Whether it was age, household income or education, all other groups favored the GOP. In terms of overall mood, the Michigan survey posted a reading of 59.9 for October, 2.2 percent better than September but down 16.5 percent from the same period a year ago. The measure is just off an all-time low of June 2022 and nearing an 11-year low on data dating back to 1978. “It’s a huge problem” for Democrats, said Greg Vallier, chief U.S. strategist at AGF Investments, who specializes in the impact of politics on financial markets. “They’ve seen enough evidence since Labor Day that shows how the economy is overriding every other issue, but they haven’t done anything about it. They didn’t say the right thing, they didn’t show enough empathy. For me, that was a really sad performance.” Valliere believes the issue could become so big that Biden may have to announce soon that he will not seek a second term in 2024. “I think the Democrats have a lot of problems right now,” he added. Consumer confidence also fell to an all-time low for housing, with just 16 percent of respondents saying they think now is a good time to buy, according to a Fannie Mae survey dating back to 2011. These kinds of readings do not bode well for the party in power. Former President Donald Trump lost his bid for re-election in 2020 when Michigan polled just above the initial pandemic low. By contrast, Barack Obama won re-election in 2012 when the survey hit a five-year high. George W. Bush won his second term in 2004 when sentiment was moderate, but Bill Clinton triumphed in 1996 when Michigan’s poll was at a 10-year high. In terms of control of Congress, in the 2010 midterm elections, when the Obama-Mayden administration lost an impressive 63 House seats, the largest drop since 1948, the reading was 71.6. That was little better than the previous year, when the economy was still emerging from the financial crisis. Today, the public is particularly concerned about inflation. After falling for two straight months, the outlook for October inflation stood at 5%, up 0.3 percentage points from September and the highest reading since July. The five-year outlook also rose, up to 2.9%, and tied for the highest level since June. The University of Michigan survey also found that respondents trusted Republicans more when it came to the fate of their personal finances. The GOP had a 15-point lead over Democrats in that category, including a 19-point gap among independents. The survey showed expectations are high that Republicans will prevail in Tuesday’s election and wrest control of Congress from Democrats. On both the general economy and personal finance questions, Republicans fared much better among those with a high school diploma or less, with a 25-point advantage on both questions. Those with a college degree gave the GOP an 8-point advantage on the economy and a 10-point advantage on personal finance.
