Biden's Re-election to Sail through Inflationary Headwind

With President Joe Biden gearing up for an all-important electoral fight, the uptick of inflation as of late is becoming a huge headache for his re-election campaign. For the month of March, the U.S. Consumer Price Index increased annually by 3.5% after having risen by 3.2% in February.

But despite the creation of more than 15 million jobs during his time in office, the shadow of inflation-which has risen 18.9% since he took office-dominates his presidency, and there is considerable doubt among voters about how well his economic policies are working. And Biden's efforts to take the sting out of high prices on things like prescription drugs, healthcare and student loans have not caught on yet with the general public.

If anything, the political outlook is further clouded by the specter of higher fuel costs: U.S. pump prices have risen sharply so far during Biden's presidency-to-date, whereas during Donald Trump's presidency, they were relatively stable. Higher fuel costs have always been politically sensitive for U.S. presidents, and this administration is no exception.

But besides all the economic concerns, Biden has another major obstacle: clinging to the support of Black Americans, which is very important for the Democratic Party. In recent polls, this demographic would suggest a move away from Biden; in swing states, some 30% of Black men are open to Trump versus a national 12% in 2020. Of all the problems facing Biden as he attempts to win a second term, the mood among voters has shifted.

Privately, the White House acknowledges that taming inflation will be a steep uphill fight. It is for a hope to which: "Treasury Secretary Janet Yellen predicted that inflation would be contained and eventually settle at levels around the Fed's target of 2% over time." Still, a recognition beneath such words is that much work remains ahead if they are to get this most salient of issues under control.

With the election at a head, the Biden campaign does increase the pressure to remind the electorate of its agenda, once again setting the tone in opposition to the campaign's efforts to cut families' costs as compared to Republican policy. It has spent an inordinate sum in advertising, including Black media, to secure firm support for its presidential run in battleground states.

Economists and political strategists alike believe that, outside of an economic event on the horizon-inflation moderated or compelled the Fed to raise rates-Biden's messaging may move little. And in any case, all said and done, this is a major part of managing the present economic challenges-likely proving the point, this year shapes the country's political topography and changes voting choice.

The bottom line is that as President Biden and his team try to navigate these turbulent economic waters, their success in managing inflation and holding key voter support will be critical determinants of the election outcome.