Economic Uncertainty Rises Ahead of Election as Real Wage Growth Falters and Inflation Remains a Top Concern for Voters

The election is just six months away, and voters’ views on the economy are becoming increasingly clear. According to a recent article in The Washington Post titled “Americans are down on the economy (again), with inflation topping election concerns,” consumer sentiment has dropped significantly, reaching its lowest point in the past six months. Gas prices have increased significantly since the beginning of the year, a sensitive issue for many voters. However, the main concern for many is the lack of growth in real wages.

The article discusses a graph showing the cumulative change in real average hourly earnings for all workers over time. Real wages have declined since the start of the Biden Administration. Inflation peaked in June 2022 and began to decrease until it ended at its lowest level at the end of 2023. Unfortunately, recent spikes in inflation have caused real wages to decline again in 2024. Despite efforts by the White House to address inflation and improve living standards, it seems that there is no clear message that resonates with voters.

Jared Bernstein, chair of Biden’s Council of Economic Advisers, proposed making billionaires and corporations pay their fair share as a solution to addressing inflation. However, this proposal has been criticized for lacking economic logic.

There is also uncertainty about whether inflation will remain a top issue or if economic growth will become more prominent leading up to the election. Recent data on credit card use, employment, retail sales, housing starts, and services employment suggests a potential slowdown in the household sector.

Overall, it appears that despite efforts by both politicians and economists to improve living standards and address inflationary pressures, voter sentiment remains focused on concerns about real wage growth and rising costs such as gas prices.