Bidenomics: Better Data But Sentiment Sours

By: Anneken Tappe · September 11, 2023 · Reading Time: 2 minutes

Boom Or Gloom?

The economy may be humming along, but consumer sentiment lags behind.

By several metrics, the U.S. economy has seen a significant upturn since President Biden took office in 2021: The nation emerged from the pandemic, unemployment continued to fall, and inflation finally came down from a multi-decade peak. Yet, a majority of Americans believe Biden’s policies have negatively impacted the economy.

Considering the consistent job growth, low unemployment, and rising wages characterizing the past few years, the apparent disconnect between numbers and sentiment has surprised analysts.

Homeowner Headaches

So what gives? The answer lies in two key areas: inflation and housing.

For many Americans, the dream of homeownership feels more distant now than ever. Mortgage rates, which sat at a record low of 2.7% at the time of Biden’s inauguration, have since climbed above 7%. Buyers also face historically-low inventory, driven by high material costs, labor shortages, and homeowners who locked in low mortgage rates and are unwilling to sell. This amplifies an already scarce inventory In the U.S. housing market that is still subject to the lingering effects of the 2008 subprime mortgage crisis.

Inflation plays a role in the housing shortage in terms of higher material costs for new builds. But price hikes have been tough to swallow for consumers of all products, weighing on sentiment even as the pace of inflation has come down. But that’s just it: the pace of price increases has slowed, but that doesn’t mean that anything has gotten cheaper.

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