If you’ve bought anything lately, you might have noticed that the cost of just about everything has been going up. There’s been a lot of this in the past year or so, as supply chains were disrupted all over the world and demand for certain goods increased during the pandemic, but this is different. It’s not just about the price of certain goods skyrocketing momentarily. Instead, this is a generalized price increase of all sorts of consumer goods and services as the economy reopened and people began to go out and about more in their day-to-day lives. This was reflected in the recent jump in the Consumer Price Index.
Economists were relatively unfazed by this spike in the price of everything: They expected the increase as economic activity rebounded and predict it will fade as the reopening continues. That’s all well and good for Wall Street, but while economists and institutional investors might remain calm, what really matters when it comes to inflation is perception. Just as with a medical procedure, while the professionals may be confident that all will turn out well in the long run, the patient might not share that sense of optimism. In the case of inflation, the patient isn’t just one person, but also nearly every single U.S. consumer: As the price of everything rises, we all feel it, whether directly or not.
That’s where the political calculation comes in, not only in whether inflation is a real problem for the economy, but also in whether voters think it is. Polls are beginning to reflect concerns among voters about inflation: The issue is coming closer to the front of their minds even as the professionals insist it’s no big deal. If economists are right, and inflationary pressures rapidly recede, then it may indeed end up being a moot point. Voters frequently have frustratingly short memories, so if overall prices are back to pre-pandemic levels by next summer, then all will likely be forgiven.
Similarly, if the price of most goods and services continues to rise – or even just remain at current levels – well into next year, then many voters will be frustrated and angry. Many of them will have had to put their post-pandemic plans on hold, whether that’s buying a new home or simply going out to dinner more often. If they have to do that, they’re going to lay the blame at the feet of majority Democrats, at the state and federal level. That’s not always a fair reaction, as the state and federal government have much less control over a large free-market economy than many imagine, and the two parties often work together during crises.
In these forthcoming midterm elections, though, that will be an entirely reasonable reaction if inflationary pressures don’t recede. At both the state and federal levels, the primary accomplishments of the Democratic majority has been the passage of spending bills to pump taxpayer money into the economy. While the majority claimed to want bipartisanship, in fact, they ignored Republicans to pass these bills.
This stands in contrast to the last time the federal government responded to a recession, in 2009, when the stimulus bill received a modicum of bipartisan support. Democrats at least listened to Republican concerns, agreeing to a smaller spending bill that a few Republicans (including Maine’s two U.S. senators) supported. This time, they received no bipartisan support in Washington for their spending bill, nor did they receive any in Augusta for distributing that federal money. That makes the impact of those pieces of legislation completely the responsibility of the majority.
If economists are right and inflation isn’t a problem, Democrats can take full credit for the economic recovery. On the flip side, if the economy tanks again thanks to inflation, they’ll take the full blame. What’s more likely than those scenarios, though, is that prices remain high in some areas, while they drop back down in others. This would be a mixed bag for the economy, as some people would profit from higher prices while others continued to be hurt by them. That will be difficult terrain for candidates, as those benefiting from the new economy will be satisfied while those left behind remain frustrated. The outcome of the midterm elections, both as a whole and in individual races, will hinge on whether candidates and parties can correctly identify which voters are which. That’s likely to be a challenge for candidates all along the ideological spectrum come next year.
Jim Fossel, a conservative activist from Gardiner, worked for Sen. Susan Collins. He can be contacted at:
jwfossel@gmail.com
Twitter: @jimfossel
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