Opinion | American's dissatisfaction with economy: Where did it come from?

By Li Lingxiu

In the 2024 US presidential election, economic issues have become a major weak point for the Democratic Party.

Despite the fact that under Biden's administration—over four years—US GDP has grown by 12.2%, the stock market has repeatedly hit new highs, consumer spending remains strong, and unemployment rates are at historic lows, public dissatisfaction persists. Even inflation is actually a natural outcome of fiscal expansion to stimulate the economy. So, why do Americans still feel discontent?

At the start of his term, Biden implemented fiscal subsidies to address the impacts of COVID-19, including a US$1.9 trillion relief package, followed by a series of infrastructure initiatives such as the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act. With sustained high growth in federal government spending, the US economy has yet to enter a recession, even amidst the Federal Reserve's aggressive interest rate hikes.

Financial Assets on the Rise

However, the results of "Bidenomics" have not been widely acknowledged. According to survey data from earlier this year, only 38% of respondents rated Biden's economic policies positively, while 65% preferred the economic environment during Trump's presidency. This reveals a core issue: the apparent "wealth" of the US economy may only benefit the extremes of the wealth spectrum, leaving the middle-class feeling overlooked.

One end of the wealth spectrum is the middle-class households. Data shows that since the first quarter of 2020, the investment income of the US household sector has increased by over US$46 trillion. As of June 2024, the median value of US household stock investments surged to US$250,000, a historic high. Stocks now account for 48% of household net assets, the highest level since the dot-com bubble of 2000.

Crucially, many middle-class families took advantage of low interest rates to refinance debt, locking in lower borrowing costs. As a result, even the Federal Reserve's aggressive rate hikes have not suppressed middle-class consumer spending; instead, strong purchasing power has contributed to persistent inflation in the US.

On the other end of the wealth spectrum lies the labor force. The Biden administration has expanded employment opportunities in key industries under the banner of "reshoring manufacturing." According to White House statistics, as of January 2024, over US$649 billion in private-sector investment has been attracted to the US in sectors like semiconductors and clean energy.

Regionally, manufacturing investments in key swing states heavily rely on Biden's industrial policies. For instance, since the Inflation Reduction Act was enacted in 2022, Georgia has received nearly US$15 billion in clean energy investments, including solar and lithium battery manufacturing.

In the context of ongoing capital inflows, the U.S. has seen a surge in strike activities over the past two years. In September of last year, Biden made a special trip to Michigan to express his support for the United Auto Workers (UAW), becoming the first sitting president in history to stand in solidarity with a strike rally. As a result, the UAW ultimately secured wage increases ranging from 25% to 68%.

This year, the strike by port workers concluded with an agreement for a 62% wage increase over the next six years. Additionally, the union representing Boeing workers recently reached a negotiation agreement that includes a 38% wage increase over four years.

Social Blue-Collar Workers? Neglected

While middle-class families have increased their property income through financial assets and blue-collar workers have secured higher wages through strikes, a significant portion of Americans—particularly social blue-collar workers and recent graduates—find themselves in the middle of the wealth spectrum. They bear the brunt of rising inflation and housing costs while facing the risk of job displacement by generative AI.

Thus, while Biden's government may present impressive economic data, the "prosperity narrative" packaged by officials does not resonate with the genuine experiences of the public. Even though the Democratic Party's industrial policies have repeatedly favored swing states, the results of the recent presidential election show that residents, unfortunately, are not convinced.

(Source: Ta Kung Pao)

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