For Democrats to have a fighting chance of keeping control of Congress this year, they needed inflation to show marked improvement in May, followed by steady declines through the summer and fall.
Not gonna happen. Inflation in May went the wrong direction for Democrats, and even though the midterm elections are still five months away, it’s probably a safe bet Republicans will capitalize on soaring prices to take at least one chamber of Congress. Barring something dramatic or unforeseen, it’s hard to see how the economic picture could clear up enough by November to lift voters out of the deep gloom they feel, which they’ll take out on President Biden and his fellow Democrats.
Some economists thought (hoped?) inflation had peaked for the cycle in March, when it hit 8.5% on a year-over-year basis. It dipped to 8.3% in April, suggesting the worst was over. But the latest numbers show it shot back up to 8.6% in May, the highest level since 1981.
Gasoline prices, up 49% year over year, get the most attention, especially with average prices now likely to crest $5 per gallon. But gasoline only accounts for about 3% of the typical family’s spending and there are many other burdens on family budgets. Groceries account for about 8%, and the cost of food is up 12%. Housing costs, the biggest family expense, are up 7%, which may not sound that bad but is considerably higher than average wage growth. Car inflation has moderated, but new-car prices are still 13% higher than a year ago, with used cars up 16%.
Consumers are despondent. The University of Michigan’s confidence index hit the lowest level on record in May, in data that goes back to 1977. That means consumers are in a worse mood now than they were during the 2008 financial crash, the aftermath of the 9/11 terrorist attacks or the back-to-back recessions in the early 1980s that featured interest rates of nearly 20%. And we’re not even in a recession!
Biden is right when he says the economy is much stronger than people give it credit for. The job market is still hot and the unemployment rate is at a near-record-low 3.6%. Other confidence surveys, such as the Conference Board’s, aren’t nearly as glum. One particular problem for Biden, however, is the direction of the economy, which is clearly slowing, in part because of high inflation and the Fed’s late but determined effort to do exactly that—slow purchases and other types of activity, to reduce demand and get inflation under control.
The specifics of the economy don’t matter to most voters, because things simply feel wrong. Russia’s barbaric invasion of Ukraine is part of that, with many Americans aware that the resulting increase in oil and gasoline prices is something the United States can’t control. Those voters may not blame Biden for $5 gas, but it’s also a bummer to know the United States still depends to some extent on curs like Russian President Vladimir Putin for abundant energy.
The oil squeeze could get worse as Europe tries to wean itself from Russian energy and the United States looks for ways to further tighten sanctions on Russia, with the Ukraine war looking like a painful slog through the summer and into the fall. Energy costs are now getting high enough that they’re substantially raising overall costs for manufacturers, food producers, shippers and many other types of businesses, which are passing them on to consumers. This is how inflation went from possibly temporary in 2021 to persistent in 2022.
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Much of this isn’t Biden’s fault, but Democrats would have a tough time keeping control of Congress even if the economy was great and the world was at peace. Their thin majorities in each house were unlikely to withstand the midterm election snapback effect, and redistricting after the 2020 Census is likely to benefit Republicans more than Democrats.
Nasty inflation is now likely to clinch a Republican retake of the House. The University of Virginia’s Center for Politics gives Republicans 214 safe or likely seats in the November midterms, with 193 safe or likely Democratic seats. That leaves 28 toss-up races, and Republicans would only need to win four of them to take control.
The Senate battle is closer, with the Center for Politics predicting 49 seats likely to go Republican and 47 likely to go Democratic. That leaves four toss-ups that would determine control. Republican need to win two.
It’s likely to be a tumultuous summer, with the Supreme Court aimed to overturn the Roe v. Wade nationwide abortion protections by the end of June. Appalling gun violence is as much of a scourge as ever. And the House Jan. 6 committee has begun to reveal what seems to be reams of new evidence implicating former President Donald Trump in the 2021 attacks on the Capitol. All of this will keep partisan flames white-hot, and some Democrats think the ongoing portrayal of Republican governance as extremist will boost their odds in November.
It seems unlikely. Democrats can’t credibly say they have the votes to codify Roe via legislation, or to pass meaningful laws that would limit gun violence. And the Jan. 6 hearings, as compelling as they might be, are more about the past than the future. Voters care about those issues, but above all else, right now, they want a cure for inflation. The Federal Reserve might have it, but politicians don’t.
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