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President Ronald Reagan rode a “Morning in America” message to a blowout re-election victory in 1984, based partly on warm feelings about his economic performance. Today’s economy is similar in many ways to Mr. Reagan’s as he entered that campaign, with one big difference: There is widespread voter angst over the incumbent’s economic stewardship.
A New York Times/Siena College poll shows President Biden trailing his likely Republican opponent, former President Donald J. Trump, in key battleground states. Poll respondents rate the economy poorly and say they trust Mr. Trump more to fix it. That’s true even though the economy grew faster and added more jobs over the last year than forecasters expected, while inflation fell sharply from what had been a four-decade high.
In public and private conversations, and in consultation with outside economists and other experts, Mr. Biden’s economic team has been consumed with that disconnect: Why do Americans remain so down on the economy when economic data are trending up?
The answer is almost certainly some combination of how Americans process the economic moment and how Mr. Biden communicates about it.
In both cases, the contrast with Mr. Reagan — and with the economic environment of the early 1980s — is instructive.
In the fall of 1983, Mr. Reagan’s re-election was not assured. The nation was still emerging from a recession that had marred his first two years in office. Consumer prices had risen more than 15 percent since he took office — nearly as much as they have risen on Mr. Biden’s watch. Translated into today’s dollars, the price of a gallon of gasoline was about $3.80, about 40 cents higher than it is now. The typical American’s wages had not increased at all during Mr. Reagan’s tenure, after adjustment for higher prices, similar to Mr. Biden’s experience.
But public faith in the economy, and in Mr. Reagan’s handling of it, was significantly stronger than it is for Mr. Biden.
The University of Michigan’s Index of Consumer Sentiment was roughly 50 percent higher under Mr. Reagan in the fall of 1983 than it is now. Polls showed his approval rating climbing, including sentiment on the economy, in a reversal from the start of the year.
A year later, Mr. Reagan would air “Prouder, Stronger, Better,” a television ad that began with the words “It’s morning again in America.” It highlighted falling inflation and lower interest rates allowing more Americans to buy a home.
Mr. Reagan’s appeals worked in part because Americans had just endured more than a decade of persistently high prices and high interest rates. Economists and historians generally agree that voters came to see the progress under Mr. Reagan as relief from a long, difficult period.
Voter psychology is very different under Mr. Biden. The 9 percent annual inflation rate that the country experienced last year was more than triple the average rate from the end of Mr. Reagan’s time in the White House to the start of Mr. Biden’s. Those mortgage rates Mr. Reagan trumpeted? They were around 14 percent in 1984. Right now, rates are just below 8 percent. The difference is that under Mr. Reagan, rates fell, and under Mr. Biden, they’ve gone up.
For Mr. Biden and his economic team, “the problem is really in the way people think about and process economic information, rather than the economic fundamentals,” said Francesco D’Acunto, an economist at Georgetown University’s McDonough School of Business who recently briefed the White House Council of Economic Advisers.
Mr. D’Acunto presented slides at the White House highlighting work he and colleagues have done, drilling down into how consumers process price increases. They find that consumers’ attitudes are shaped most by the products they buy most often — like milk, gasoline, bread and beer — and not by the things they spend the most money on.
They also find that unexpected price surges stick in shoppers’ minds, negatively. They linger in a way that slower-building price increases, or even prolonged periods of high prices, do not.
That research helps explain why voters did not punish Mr. Reagan for inflation even though the price growth he oversaw never reversed itself: They were accustomed to rapid price growth and grateful for improvement.
One overly simplistic explanation for Mr. Biden’s woes is that voters are waiting for prices to fall back to their prepandemic levels. If that were true, Mr. Biden would almost certainly be doomed electorally. On the whole, the path of prices across American history is an upward march.
But Mr. D’Acunto says his research suggests that Mr. Biden might be able to brighten voters’ moods by mounting a public persuasion campaign, focusing on prices that have begun to come down from recent highs. That includes consumer electronics like smartphones and computers, which are less expensive today than they were a year ago, on average, and which are often large-dollar purchases.
Mr. Biden’s campaign recently spent $25 million on television ads to promote “Bidenomics” — a mix of the president’s blue-collar background and policy blueprint that is meant to resonate with the working class. It includes an ad focusing on a provision in the Inflation Reduction Act, which Mr. Biden signed last year, that seeks to reduce the cost of prescription drugs through Medicare. Campaign aides say it is scoring well in surveys with viewers.
There is little evidence in polls that those efforts have broken through. Biden aides say they did not expect immediate results. They are testing messages, they say, including how best to talk about Mr. Biden’s economic record, as the president prepares to spend $1 billion or more in advertising before the election.
Aides also insist that continued economic improvement will eventually punch through to the public. They contend that continued wage growth will restore some of the buying power Americans lost to recent inflation, and that consumers will gradually acclimate to prices that are higher than what they were used to before the pandemic.
“What the president brings to the table is a deep and effective pro-worker agenda that’s maintaining a great job market, putting downward pressure on prices,” Jared Bernstein, the chair of the Council of Economic Advisers, said in an interview. “I understand that hasn’t reached the sentiment indexes yet. But I’m confident it will.”
Some Democrats worry that Mr. Biden himself is a barrier to getting that message through, particularly to younger voters who express concerns over his age. Campaign officials say his direct appeals resonate well in tests. The Reagan comparison offers evidence for both sides.
Economic surveys have become more politicized in recent years, with Republicans in particular resistant to praising the economy’s performance with a Democrat in office. Still, components of the Michigan survey suggest that Mr. Reagan had far more success than Mr. Biden as an economic cheerleader.
Mr. Reagan made a habit of both championing the economy’s performance and critiquing press coverage of its flaws. At this point in his presidency, Americans were far more likely to report hearing positive news about the economy and prices than they do under Mr. Biden. They even reported hearing better news on unemployment, at a time when the rate was near 9 percent. It is under 4 percent today.
Mr. Biden has often tried to strike more of a balance between celebrating strong job growth and acknowledging the pain of high prices. He has leaned more into boosterism in recent months — as the share of Americans reporting in the Michigan index that they hear good economic news has grown.