President Joe Biden will try to convince the public tonight that the state of our union is strong, but voters know it is not.
Despite low unemployment and a soaring stock market, a whopping 72% of people rate the current economy as either “fair” or “poor” compared to just 28% who say it is “good” or “excellent.” Asked to rate the economy under President Donald Trump versus the economy under Biden, 65% told CBS News the economy was good under Trump compared to just 38% under Biden.
If the unemployment rate is so low and the stock market is so high, why are people telling pollsters the economy is bad?
The answer, according to a new working paper from the National Bureau of Economic Research, is that high interest rates, caused by inflation, have made it more expensive for consumers to borrow money to pay for what they need.
“Concerns over borrowing costs, which have historically tracked the cost of money, are at their highest levels since the Volcker-era,” the authors write. “Global evidence shows that consumer sentiment gaps across countries are also strongly correlated with changes in interest rates.”
We can see evidence of the authors’ theory in the latest news that credit scores for American consumers recently fell for the first time in over a decade.
“High interest rates and higher prices have weighed on most Americans’ financial standing,” CNBC reports. “Consumers as a whole are falling deeper into debt, causing an increase in credit card balances and an uptick in missed payments, FICO found.”
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“As of October, the average credit card utilization was 35%, up from 33% a year earlier,” CNBC continues, “and just over 18% of borrowers had a more than 30-day past-due missed payment against their credit accounts, up from 16.5% the year before.”
Until Biden and the Democrats can get inflation and interest rates, expect voters to keep rating Bidenomics as “poor.”