Extract from ABC News
Analysis
Conventional wisdom isn't as reliable as it used to be.
If it were, you could confidently predict that US President Joe Biden would be re-elected to the White House later this year, the same way he easily won yesterday's Democratic primary in South Carolina.
If you apply fact, logic and history, the argument for a Biden victory against Donald Trump in November is overwhelming.
The incumbent Democrat will be running against a Republican opponent who is facing 91 criminal charges and may be a convicted felon by election day; he's presided over America during a period of recovery from a devastating pandemic; he's stabilised the country after the wild rollercoaster of the Trump administration culminating in the January 6 riots at Capitol Hill; the big US economic indicators — unemployment, growth and inflation — are trending the right way and America has unexpectedly avoided a recession; and Biden has extensive experience in foreign policy at a time of global volatility, from the Middle East to Ukraine.
So why is that analysis not bankable?
Well, take a look at conventional wisdom's recent track record. It dismissed the prospect of Trump securing the Republican candidacy in 2016. It then wrote off any serious chance of Trump defeating Hillary Clinton and actually becoming president. And in no way did it foresee the scale of his comeback this year, crushing the Republican field almost instantly to all but secure his party's nomination, notwithstanding Nikki Haley's refusal to wave the white flag.
Against that strike rate, only a bold commentator would say Biden is going to hit a home run for re-election.
The challenges for Biden
Biden has more problems than simply Trump's up-ending of the rule book.
One is that his age troubles voters of all stripes. At 81, Biden is the oldest president in American history to make a re-election bid. His opponents weaponise that, asking whether he's "still up to it" even though Trump is 77. These are two men who were rocking through their teens to the sounds of Buddy Holly and Elvis Presley, and taking their dates to movies starring John Wayne and Doris Day.
Another problem for Biden is his consistently poor approval rating. The most credible poll average shows only 39 per cent of American voters think he's doing a good job.
He also has to navigate controversial political issues that excite parts of his own base but alienate mainstream Americans. Biden is at pains to distance himself from extreme views within the Democratic movement on topics such as immigration, gender identity and Israel. They are issues that Trump can easily manipulate to spread fear and anger among American voters who Democrats need to lure back from the Republican Party, particularly the white working class.
Perhaps the biggest risk for Biden is the disconnect between the performance of the US economy (improving solidly) and voters's perception (that times are tough and getting tougher).
The US economy has recovered far better from its COVID-triggered slump than anybody predicted — including the US Federal Reserve.
A year ago, America had high inflation, anaemic economic growth and rising unemployment. It was predicted to go into recession in 2023.
Now, inflation has sharply fallen from 9.1 per cent in June 2022 to 3.4 per cent today. Unemployment at 3.7 per cent is well below the long-run average. Economic growth is stronger than anticipated, real wages are rising and inequality is lessening. Recession hasn't materialised, although it's not an impossibility.
The problem for Biden is that the rosy data doesn't reflect the experience of many Americans. In an Axios Vibes Survey conducted by Harris Poll in December, 76 per cent of Americans agreed with the statement: "Things are getting better but we don't feel it where I live."
Seventy-seven per cent of them said the country was trending in the wrong direction.
What is a 'vibecession'?
This discrepancy has been termed the "vibecession". Kyla Scanlon, a former options trader and writer, coined the word in mid-2022 to describe the disconnect between how things are in reality (as measured by objective data such as inflation and unemployment) versus everyday experience (our subjective thinking when we buy things such as groceries or petrol).
How we feel about economic transactions in our daily lives depends on our expectations and those can range from the illogical ("I deserve a new car because I've been driving the same one for five years but I can't afford it because Biden has stuffed the economy") to the reasonable ("I need a new car because this one keeps breaking down but it's harder to save at the moment because I spend my whole pay packet every week").
We are more likely to believe our personal opinions about the economy — even when they're based on unreasonable expectations or illogical thinking — than cold, hard data that contradicts our vibe. Why?
One reason is a psychological and economic theory called "loss aversion". You know how you've always remembered that nasty thing some kid said to you at school 20 years ago, but compliments don't stick in your head the same way? That's loss aversion; the tendency to remember bad experiences more vividly than good ones.
In economic terms, if you get stung with a $650 dental bill, you're going to remember that more than the time you broke your arm and didn't pay anything for two nights in hospital. A consumer tends to remember losses and expenses more readily than they remember windfalls or bargains. In other words, good economic news slides past (more people have jobs) but bad stuff sticks with us (Saturday's grocery bill was expensive).
A second relevant psychological theory is "frequency bias". It means that things you do all the time influence your thinking more than things you do only occasionally. In the US, prices of big-ticket consumer goods such as television sets and fridges have fallen in recent years. Prices of petrol and groceries have increased. We may only buy a television once a decade, but we buy groceries every week. Therefore, we feel like everything is more expensive even though some things are, in fact, cheaper. The frequency with which we buy groceries or petrol influences our thinking more than our bigger, occasional purchases.
Add to all of this the fact that Trump has normalised indulging your own "vibe" about the world, rather than relying on facts and data. He's all about gut and instinct. One of his favourite words is "unfair". Jobs going offshore, groceries costing more, political correctness: It's all "unfair".
The question of whether something is "fair" or not is one of life's most subjective assessments. But every wild claim Trump makes about "unfairness" based on feelings rather than evidence tacitly gives everybody else permission to do the same.
Let's be honest though, perceptions of economic hardship aren't all "the vibe" or manufactured reality either, and that's bad news for Biden. For many people, life is demonstrably tougher. Jobs and industries that were a former source of American greatness have disappeared. Groceries are still ridiculously expensive compared to what they were pre-COVID-19. Credit card defaults and bankruptcies are rising. There are fewer permanent jobs. Housing values have fallen and it can be harder to sell a property or secure a loan due to higher interest rates. Petrol prices have been sky-high. Economic hardship is certainly not a figment of the imagination for the millions of Americans who live it every day.
The latest consumer data provides a glimmer of hope for Biden that the "vibecession" might be passing and that Americans genuinely doing it tough are starting to feel better about their prospects. The closely watched University of Michigan survey shows that during the past two months, there has been the largest spike in consumer confidence in more than 30 years.
The improved outlook traversed wide demographics: age, education, income and political leanings. Based on historical experience, if reality and perception come together on the economy, it should be a boost to Biden's re-election bid. But that analysis relies on conventional wisdom, so take it or leave it.
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