Politics

Biden’s Approval Rating Sinks To New Low: Inflation Continues To Surge Amid Large Democratic Spending

In a new low approval rating for Biden, the President scores even lower in terms of economic approval than his predecessor Donald Trump. His approval rating is dropping to 38-43% based on the results of different polls.

A majority of 51 percent of registered voters say they’d support the Republican candidate in their congressional district, versus 41 percent the Democrat. That represents the biggest lead for the Republicans since 1981. There are several key points where Biden severely under-performs. Surging inflation and rising gas and food prices are the main reason for his low economic approval rating of 39 percent. This is even lower than Donald Trump’s low amid his trade war with China. Just 41 percent of Americans approve of the President’s performance, which is down 11 percentage points since spring 2021. Interestingly, is the drop in confidence amid Democrats, as just 80 percent of the Democrats are still satisfied with Biden’s performance so far, down from 94 percent this summer.

Figure 1 – Biden’s approval rating

Polarization Is One Of The Key Issues For U.S. Voters

A Quinnipiac poll has showed that the top problem the United States faces is polarization, as 11 percent of the respondents pointed it out as the most important problem in today’s society. Biden’s push for a vaccine mandate for large companies has cost him some support, as President Biden’s net approval rating among unvaccinated black voters has dropped a stunning 17 points after the announcement. Black voters have a vaccination rate of 53 percent and are a key demographic group in swing states, therefore this drawback is potentially very harmful to his overall approval dynamic. Support for Biden in swing state Iowa dropped to a new low of 33 percent, where he just one year ago got 44.9 percent of the electoral vote during the Presidential Elections. However, it should be noted that there seems to be slight majority that support vaccine mandates.

More shocking is the widening gap between the support for the Republican Party versus the Democratic Party as can be seen in the following graph of the New York Post.

Figure 2- Republicans could regain control

Supply Chain Disruptions Soon To Be Resolved

However, as new trillion dollar spending bills are passed by the Senate the continuous and non-transitory inflation could last even longer affecting Americans to the point where his approval could drop to historic lows. However, there are signs that supply chain problems will be over soon as manufacturers are increasingly investing in the scale up of supply chains, as the spike in consumer demand seems to be lasting. But the new spending bills will place continuous pressure on supply chains and the overall economy.

The FED Is Finally Changing Its Attitude Towards Current Inflation

The announcement of the scale down of quantitative easing by the FED was expected. Interesting is how their choice of words and phrasing changed compared to previous months. As the sentence: “inflation is elevated, largely reflecting transitory factors” was altered in the newest FED announcement.

“Inflation is elevated, largely reflecting factors that are expected to be transitory”

Chairman Powell on U.S. inflation levels

Even though it is not a big change, “expected to be” is much weaker than simply “are”. This means that the Fed’s confidence in its own transitory narrative has diminished, which implies that inflation might be more persistent than initially thought, further hurting Biden’s approval.

For now, Republicans are expected to win by a sweep in the 2022 midterm elections, but much can change in the meantime. However, if Democrats continue to hurt American consumers with elevated inflation due to their excessive spending, no real change can be expected. The FED’s policy change is a good start, however, The Golden Investor remains skeptical of the success of the quantitative tapering which is supposed to start in May 2022. Back in 2019 the FED was forced to stop tapering, this time the economy is even more delicate. Time will tell whether the United States will come out of this split.

Disclaimer: The Golden Investor is not a fortune-teller, be sure to make the right decisions in accordance to your own financial situation, this is not investment advise or anything like that.

Bibliography

  1. https://www.langerresearch.com/wp-content/uploads/1223a2Politicsandthe2022Midterms.pdf
  2. https://poll.qu.edu/poll-release?releaseid=3827
  3. https://nypost.com/2021/11/18/biden-approval-rating-hits-36-percent-in-quinnipiac-poll/
  4. https://www.investec.com/content/dam/united-kingdom/downloads-and-documents/cib/global-economic-overview/global-economic-overview-august-2021.pdf

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