Economist Mohamed El-Erian weighed in on Sunday regarding poll results revealing a poor approval rating for President Joe Biden‘s economic policy.
What Happened: According to a survey conducted by the Financial Times-University of Michigan Ross School of Business combine, 42% of registered voters preferred Donald Trump over Biden as the best-suited candidate to steer the economy. In contrast, only 31% believed Biden would be a better bet, giving the former president an 11-point lead.
El-Erian commented on these findings, stating, “Given the number of #jobs created and the US #growth out-performance relative to both other countries and the consensus forecasts, many would have expected the management of the #economy to be a plus for the Administration.” However, he noted, “Instead, voters continue to see it as a relative weakness.”
The economist highlighted two potential reasons for this anomaly: “The persistent pain of higher prices (real and perceived inflation); and the lack of consistent economic communication on the part of the Administration.”
See Also: Best Inflation Stocks
Consumer price inflation surged to 9.1% in June 2022 due to stimulatory measures announced after the COVID-19 pandemic. While the Federal Reserve’s successive rate hikes have helped rein in inflation, it still remains above the central bank’s target.
Despite easing, inflation expectations have remained above the Fed’s target. According to a consumer sentiment survey by the University of Michigan, one-year inflation expectations were at 2.9% in January, down from 3.1% in January.
On the communication front, Biden and his team have touted the progress made on the economic front, but this has not resonated with the American public. The country’s strong economic growth under the current administration is attributed to resilient consumers, who contribute roughly two-thirds of economic activity.
However, much of this consumer spending has been fueled by borrowings, as income levels have dwindled amid job cuts and inflation eating into nominal wages. Additionally, the country has accumulated record debt to finance its spending, raising concerns about the overall economic outlook.
The iShares TIPS Bond ETF TIP, an exchange-traded fund that tracks the investment results of an index composed of inflation-protected U.S. Treasury bonds, ended Friday’s session down 0.14% at $106.33, according to Benzinga Pro data.
White House photo by Adam Schultz.
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