NEW YORK FOREIGN PRESS CENTER, 799 UNITED NATIONS PLAZA, 10TH FLOOR (Virtual)
MODERATOR: Hello, good morning, and welcome to the latest briefing in the New York Foreign Press Center’s 2022 U.S. election midterm series. I would like to welcome our FPC members as well as our overseas journalists. My name is Mahvash Siddiqui, and I’m the moderator. Just a reminder, this briefing is on the record.
First I will introduce our speakers and then I will go over the ground rules. For today’s briefing, we welcome Professor James Hughes, Dean Emeritus of School of Planning and Public Policy, Rutgers University. Professor Hughes is a nationally recognized expert on the U.S. economy. He will discuss the state of the U.S. economy and will share the latest economic indicators, trends, and issues that will put the 2022 midterm elections into context.
Our second speaker, Professor Ross Baker, is a distinguished professor of political science at Rutgers University. Professor Baker will explain how the U.S. economy may affect American voters’ sentiments.
And now for the ground rules. This briefing is on the record. The briefers are independent experts and the views expressed by the briefers are their own. Our briefers are not affiliated with the Department of State or the U.S. Government and do not reflect the views of the Department of State or U.S. Government. Participation in Foreign Press Center programming does not imply endorsement, approval, or recommendation of their views.
Following our speakers’ opening remarks, I will open the floor for questions. And if you have a question, go to the participant field and raise your virtual hand, and wait for me to call on you. When called on, please enable both your audio and your video, and identify yourself by your full name and your outlet.
And with that, it is my great pleasure today to introduce Professor Hughes as our first speaker. Professor, over to you, sir.
MR HUGHES: Thank you. Is this – is the slideshow visible?
MODERATOR: Yes, sir. It’s very clear.
MR HUGHES: Since we are attempting to look into the future today, there is one basic admonition that I have to provide you before we begin. Many times, I’ve been accused of being much better at forecasting the past than forecasting the future. Unfair, perhaps very unfair, but probably due to the simple fact that I’ve actually forecast nine – forecast nine of our last five recessions. So consider yourselves forewarned.
Current perception of the economy: storm clouds ahead, particularly since the inflation report this past Wednesday. So let’s look at current economic conditions to see if this perception is warranted.
So baseline starting question: Where is the United States in the business cycle/economic cycle? Let’s start with a brief glance in the rearview economic mirror. February 2020, 29 months ago, was the last peak of the U.S. business cycle. That’s the middle of the slide, shaded in yellow. It was the final month of a record-breaking 128-month-long economic expansion which started way back in June 2009. By February 2020 we had record high job levels, record low unemployment rates, and ultra low interest rates. Yet inflation was in full hibernation, not to be found. It was an unprecedented set of positive economic conditions.
But unfortunately, we have yet to invent a boom that lasts forever. Truth be told, expansions in the United States rarely die of old age. They rarely die in their beds. They’re usually murdered by the Federal Reserve sharply increasing interest rates to combat inflation. Obviously, one of the most worrisome economic concerns of today.
However, in February 2020, the record long expansion was done in by an unforeseen assassin: COVID-19. We experienced nothing less than a hyperspeed economic plunge. We had a dramatic, draconian shutdown of the economy that caused a two-month loss of 22 million jobs across the country. Essentially, livelihoods were sacrificed to save lives, in health terms. But two months later, April 2020, marked the turning point: the technical end to the great contraction shaded in yellow in the slide. At that point, the restart button was hit, and the current expansion began.
The subsequent 26-month rebound from June 2022 are the last data point shaded in yellow in the slide. Between April 2020 and June 2022, total employment in the United States increased by 21.5 million jobs. So in a little over two years, the nation recovered 97 percent of the jobs lost during the recession – 97.7 percent. The sustained recovery pattern (inaudible) is shown in this slide. Extraordinary record employment gains in the early months of the recovery – that’s the left side of the slide – were followed by strong, continued monthly gains through this past June. The employment increase in June was 372,000 jobs. Now, to put that number in perspective, that was more than double the average monthly gain experienced during the pre-pandemic record expansion. So employment growth is still going strong.
As a result, the unemployment rate plummeted the past two years. By June the unemployment rate was 3.6 percent, close to the lowest level in 50 years. Yet labor force shortages are inhibiting job growth as employers face a very significant struggle to find workers. “Help wanted” signs are still pervasive everywhere. Unfilled job openings are still at record levels. The last data point was April 2022 – unfilled job openings nationally totaled 11.4 million. And the 11.4 million unfilled job openings far exceeded the 6 million people who are unemployed and seeking work. So that is a record almost two unfilled jobs, actually 1.9 jobs, unfilled jobs, for each unemployed person seeking work. Again, an unprecedented situation. This is the highest ratio in the 21-year history of the statistic – 1.9 jobs available for each unemployed person seeking work.
However, a basic paradox, a vast disconnect – the U.S. still has a very powerful, robust labor market, yet substantial consumer unease, substantial consumer dissatisfaction. The arrow in this slide shows that current consumer sentiment is at a historic U.S. low. Households appear to be the most depressed they have been since the University of Michigan began its consumer sentiment index in the 1950s. Essentially, consumers are saying that 2022 is the worst economy ever. Now that may be an overreaction, but other metrics do suggest a very worrisome economic situation. For example, gross domestic product, the nation’s total economic output, declined in the first quarter of this year and is forecast to decline again in the second quarter. And that economic metric is more consistent with consumer sentiment, and the danger is that sour consumer sentiment will cause a significant cut in consumer spending, which will bring on an economic slowdown and recession.
So the Federal Reserve is closely watching consumer habits in determining how far it will need to go with raising interest rates to tame inflation, and inflation is soaring. In June, in data released just this week, the U.S. inflation rate reached 9.1 percent year over year, a 40-year high. Unfortunately, it’s eroding consumer buying power, savings, and wages. That has put even more pressure on the Federal Reserve to be more aggressive to slow price increases. It is already raising interest rates at the fastest pace since the 1980s. In June, it increased the benchmark rate by three quarters of a percentage point to try to combat the inflationary surge, and it will at a minimum match that increase later this month, and this will certainly slow demand and slow the economy.
One example of its impact is mortgage rates. The upward surge is evident in this chart, sharply increasing interest rate in 2022 for a 30-year fixed mortgage. And this has resulted in a slowing housing market. At the same time, for the first six months of this year the stock market has plunged by 16.6 percent. So in the context of surging inflation, housing market difficulties, and sinking financial markets, it’s not surprising that consumer sentiment has soured.
So key question: Will moving the economy to a correction mode – and that’s what the Federal Reserve is attempting to doing and what – it is where we are today – will that ultimately lead to a recession mode? Or can the Federal Reserve engineer a soft landing? A soft landing is the process of shifting the economy to slow growth, approaching but avoiding a recession, and reducing inflation to the 2 percent level.
Unfortunately, the Fed has not had a good record in accomplishing soft landings during past rate-hiking cycles. During the last five instances when inflation peaked above 5 percentage, the Fed’s subsequent interest rate increases caused a recession. So the Fed’s current attempt to engineer a soft landing is going to be a very, very difficult task for them. Worst case scenario if they fail – now, I think it is well recognized that I’m really the only totally objective person in the northeastern United States, and it is my objective forecast that around election day we will either be in a recession, or if technically not in a recession, it will certainly feel like a recession.
The good news, however, is we are not going to slide into the economic abyss. So that’s my forecast, I’m sticking to it – until next work. Thank you very much.
MODERATOR: Thank you so much, Professor Hughes, for sharing your expertise with us. Appreciate your very informative presentation.
And now onto Professor Baker. Thank you for your time, sir. Take it away.
MR HUGHES: I think he’s on mute.
MODERATOR: Professor Baker – yes, (inaudible).
MR BAKER: Thanks, thank you very much, and welcome to all the journalists from all over the world. I’m deeply flattered that we have gotten so much attention. Academics don’t always attract this much journalistic attention; we have to go looking for it.
So the Constitution of the United States is very deeply influenced by the British informal constitution, an unwritten document. And we decided at the time of our independence that we were not going to draw our executive out of our legislature. Unlike the British prime minister, who’s a member of parliament, the president of the United States is not a member of Congress. And so the usual way in which voters express their disapproval in Britain is through a parliamentary vote of no confidence for the prime minister.
But we don’t really have a way in which Congress can kind of go on record as expressing formal disapproval for what a president does. What we have instead are midterm elections. Of course, the president is elected every four years, but midway through a president’s term there’s a congressional election. And this is the vehicle for which Americans use to express either satisfaction or dissatisfaction with the performance of the president. Unfortunately, the votes of dissatisfaction, votes of no confidence, vastly outnumber the times in which the American public rallies to the president in the second year of his tenure. In fact, only three times in American history – 1934, 2000*, and 1998 are the only three times in which the president’s party did not lose seats in a midterm election. And some of these losses can be catastrophic.
Although President Obama was resoundingly elected in 2008, in 2010 his party suffered record losses. Sixty-three seats were lost by the Democrats in the House of Representatives, and six United States senators. And President Obama on the day after the election confessed that, using a kind of vintage American slang term, that the Democratic Party took a shellacking, which they certainly did. Although President Trump was elected in 2016, in the 2018 election it was clearly a vote of no confidence in President Trump.
And now President Biden faces his first midterm election. And by all examples from history of the – his Democratic Party should do badly. But there’s some complicating factors. First of all, much of what’s gone wrong with the American economy, as Professor Hughes has talked about, really can’t be laid at the feet of President Biden. Certainly the advent of the COVID virus is not – was not as a result of any political decision by any president of the United States, yet it has been the defining event that – of the certainly the last decade that has shaped American politics. And you would imagine that a disease is nonpartisan. But in fact, what grew out of the COVID epidemic was an intensification of political polarization in the United States associated with how to cope with this pandemic in the United States.
To use one example, of course, was the question of vaccines. And one of the things that the Trump administration was successful in doing was accelerating the development of a vaccine to the market. So by early 2017* (2021), relatively speaking – or at 2018* (2022), I’m sorry, there was a vaccine available to Americans. But the question was, would they take it? There was a great deal of skepticism about whether or not these vaccines were effective, whether masks were effective, whether in fact the vaccine was – whether – that COVID was a reality. Some people claimed – a fairly large number of people claimed that this was really not – nothing serious, nothing to be worried about, basically a common flu. The mortality records showed something different, but even then, even though the rates of death climbed, the rates of people in intensive care units climbed, the number of people on ventilators climbed, there was still a large number of Americans who simply did not believe that COVID was the reality that American political leaders said it was.
So – and the COVID epidemic complicated a lot of things, including the supply chain, the system by which goods move from producers to consumers. And there were lots of people who got sick. Many of these people were involved in supply chain activities. So what you had then really was a kind of crisis of supply brought on by COVID. Now none of this, of course, was the responsibility of either President Trump or President Biden, yet it affected both of them. So you have a situation in which you have a president really being held to account for problems not just in the economy but in society that were not of their doing.
But there are other actors involved in the political climate that the American people will have to contend with in the elections this November, November 6th, one of which is a series of decisions by the United States Supreme Court. And of course, members of the Supreme Court are nominated by the president, confirmed by the United States Senate, and President Trump’s greatest success was the nomination and confirmation of three very conservative justices, and they have handed down in recent weeks a series of decisions which may well have a profound effect on the midterm election. And what the precise kind of alchemy between the economy and these Supreme Court decisions and how they will affect the midterm elections is an open question.
But let me just run down these decisions. Probably at the top of the list is the decision by the United States Supreme Court to overturn the longstanding decision made by the Supreme Court in the early 1970s that made abortion legal in the United States. And this decision was an earthshaking decision and it basically kicked off a campaign among opponents of abortion to begin a 40-year campaign to try to reverse that decision. And the Supreme Court with its three new conservative justices did just that.
Americans had become habituated to the fact that abortion was, in most instances, readily available. So this is obviously a decision that affects women mostly. And female voters have always been the kind of golden key to the results of congressional elections in particular. And suburban women, who tend to be well-educated, relatively prosperous women, the kinds of people who might be expected to vote Republican, are also very sensitive to having removed from them what they consider to be a fundamental right.
And the Supreme Court basically said to American women abortion is not a fundamental right, that the right to abortion was not mentioned in the original Constitution, it was not mentioned at the time that the Civil War amendments were ratified, particularly the 14th Amendment, that abortion was not mentioned at all. In fact, women are not mentioned specifically in the Constitution at all. Certainly, women were not political actors in 1789 when the Constitution was ratified.
And members – these three very conservative members of the Supreme Court plus Justice Thomas and Chief Justice John Roberts are known as constitutional originalists; that is, that the Constitution should be understood as the Founding Fathers – James Madison, Alexander Hamilton, people like that in the 1790s – understood the Constitution. And one of the things that the people who oppose abortion have been arguing is that if James Madison didn’t think about abortion, then abortion is not a fundamental right. So that’s one decision.
A second decision was made broadening gun rights. This came out of a state court in New York State which had very strict gun control laws, which really put a burden on a person wanting a gun to prove to authorities that he or she had a serious need to have a gun. The Supreme Court said no, that the Second Amendment, which says that the right of people to keep and bear arms shall not be infringed, is an absolute command that no serious restriction can be placed on access to guns.
So that was the second decision, and of course that decision took place in the context of two very, very serious mass shootings in which people using semiautomatic rifles attacked people. There was a shooting in front of a supermarket in Buffalo, New York, followed by an attack on a school in Uvalde, Texas in which 20 people were killed, most of them – most of them small children. And this, of course, clearly had – has had an effect on American politics going into the 2022 midterm election.
You had other decisions which were somewhat more esoteric, one involving the power of the Environmental Protection Agency to issue regulations governing climate change problems. And that, of course, for – people who are much – very much concerned about the future of the Earth’s climate are very much aware that this decision makes it much harder for the Environmental Protection Agency to regulate things like smokestack emissions.
So these Supreme Court decisions, of course, have had the effect of changing the ballgame in the midterm election. So really, it’s anybody’s guess. I mean, clearly the history would favor substantial Republican gains, although the introduction of these other factors – particularly the Supreme Court decisions – makes that particular formula a little bit more complicated.
Another thing to understand about American midterm elections is that only about 10 percent of the seats in the House of Representatives are truly competitive. So the outcome of the ’22 – 2022 congressional election really comes down to a very small number of seats in places where either a Democrat or a Republican could win. And this is really the battleground for the 2022 election, are basically roughly 40 seats in the House of Representatives and a handful of seats in the United States Senate. And so the betting generally has been that the Republicans will pick up seats. The experts will say that the Republicans will still pick up seats, but they argue now that perhaps the number of Republican seats that will be won may be diminished as a result of these Supreme Court decisions.
So very much like the guessing work that goes on in the economy that my colleague, Professor Hughes, concerns him with – concerns himself with, the political scientists, my fraternity, look at congressional elections with the same kind of problematic view, problematic vision that the economists, the professional economists, look at the economy and make their determinations on, number one, what the economy will do and, number two, how this will affect the attitudes of voters in the 2022 midterm elections.
MODERATOR: Well, thank you so much, Professor Baker, for your very informative presentation. Thank you so much to both of you for your opening remarks. Let’s open the floor for questions. If you have a question, raise your virtual hand and wait for me to call on you. You’re also welcome to type your question in the main chat room.
I guess we already have some hands up. I’m going to turn to Pearl Matibe. Pearl, please go ahead and unmute yourself. Please announce your full name and your outlet. Thank you.
QUESTION: Thank you so much and good morning. I’m Pearl Matibe with Power FM 98.7. Coverage is generally the continent of Africa. My question is for both professors.
So, Professor Hughes, please, can you just help me understand – I understand that the employment numbers seem to be good, that the fact that all these jobs that had been lost with the closures due to COVID-19, that 97 percent number seems pretty good. So can you help me make the connection: What, then, explains the fact that we’re having issues with the economy? What is that stemming from? What is the root causes, I guess, is what I really want to understand? If people are back to work producing and doing what they were doing pre-COVID, why do we have this problem now? So please help me understand that, and it would be nice if you can explain what impact does that have for the rest of the world, bearing the fact that we are foreign journalists, so we want to understand the link of what impact this has on the rest of the world, particularly perhaps places like Africa.
For Professor Baker, my question to you would be: Given what is – what we think might happen for these midterm elections, how different are these from the past midterm election? So I’d like to understand the comparison between the one during the Trump administration versus the Biden administration. And then, if you do have data or whatever on these battleground states, maybe if you could pass that on to the Foreign Press Center, they can maybe send that to us. I’d like to understand which states those are so that that can help me, for example, track that. What I’d like to understand as well is what then does this have an impact to other countries given the fact that United States has this narrative of being a global leadership? So what impact, if any, will the midterm elections have? What should the rest of the world be expecting as maybe a boomerang effect or something of that nature? So I’d like to understand those linkages, please. Thank you.
MR HUGHES: Well, let me start on the economy. Basically, the labor markets are strong. Consumers currently are in good financial shape. One metric of that is they have $18.5 trillion – $18.5 trillion basically in savings – money market accounts, savings accounts, checking accounts, and the like. That is $5 trillion higher than it was before the pandemic began in February of 2020. And they also have low debt levels and the like. And so part of the reason for that was the federal relief checks that they received during the pandemic and the economic downturn.
However, looking forward, even though they are in reasonably good shape right now, they see real problems ahead. When gasoline per gallon in the United States is over $5 a gallon, a dramatic increase from where it was a year ago, they are very unhappy, and that gives them a negative perception of the future. The same thing with food and groceries and the like where prices have been soaring. And some of this stems obviously from the supply chain issues that emerged during the pandemic, pushed up the prices of various commodities and the like, and that’s reflected in a number of other segments, certainly, of the economy.
So there’s also concerns – I’m not sure exactly how to weigh these in – that we have sort of a challenge to globalization in that maybe the world economy is deglobalizing, and that does not bode well for prices of many goods and the like. There’s also unease in terms of the war in Ukraine. And there may well be a sense that things are out of control. So they’re okay today, but boy, we have – there are storm clouds on the horizon, there are issues on the horizon.
Now, one of the things that’s going to – that is impacting many parts of the world are the actions of the Federal Reserve. In order to combat inflation, they have pushed up interest rates. In historical terms, they’re not that high yet, but compared to the ultra-low interest rates of 2018, 2019, and 2020, they are exploding upwards. Now, this is strengthening the dollar. Its – the strengthening dollar hurts many developing nations, the value of their currency. The value of the euro in Europe against the dollar has plummeted and the like. So high U.S. interest rates do not bode well for the global – for much of the global economy.
And if demand diminishes in the United States, if there is a recession, that’s going to impact consumers purchasing foreign (inaudible) as the year proceeds. Again, the election technically is three and a half months away. We’ll be getting a series of economic metrics. We’ll have a series of federal month – actions taking place in each of the months to come. So again, there’s highly uncertain economic conditions around the election time.
MODERATOR: Professor Baker, over to you.
MR BAKER: Yes. I guess as a general rule, foreign policy issues don’t play a very large role in American midterm elections or even in presidential elections unless the United States happens to be at war. The most recent example, of course, is 2002, when President George W. Bush defied historical trends of midterm elections going against the president’s party in which the Republicans made modest gains in the House and Senate. The – clearly, in this – in the 2022 midterm elections, foreign policy issues are not very high on the agenda unless you define things like energy prices as foreign policy issues, and clearly, the price of energy in the United States has been profoundly affected by the war in Ukraine and the sanctions that have been taken against Russia.
But really, energy prices are seen more or less as an economic issue rather than as a foreign policy issue. And interestingly enough, Ukraine, the war in Ukraine, the attack by Russia on Ukraine, has not figured very prominently in the run-up to the 2022 election, largely because American troops are not directly involved in the hostilities even though we are providing very, very significant military assistance to Ukraine.
There are – clearly, there are other things going on in the world. For example, in terms of Africa and the advent of monkeypox as a health risk in the United States, which is being treated as a sexually transmitted disease in the United States. There’s a problem in terms of the availability of vaccine to inoculate people against monkeypox. We did have stocks of that in the United States, but there have again been problems with supplying it in the quantities that are needed.
So barring some other event – I mean, there are kind of background factors certainly involving international relations and foreign policy. The evacuation, hasty evacuation of American forces from Afghanistan, which President Biden pledged that he would do based upon the belief that the Afghan Government could hold out for a period of time, the very quick collapse of the Ghani regime was very much a blot on President Biden’s foreign policy ledger. But that took place quite a while ago, and has been superseded by other concerns and other problems which the President may have to deal with, most conspicuously domestic inflation.
MODERATOR: Thank you, professors, for that response. I’ll turn it over to Alex. Alex, please state your whole name and your media outlet and ask your question. Thank you.
QUESTION: Yes, thank you, Mahvash This is Alex Raufoglu from Turan News Agency of Azerbaijan. And I thank, of course, both of the speakers for a very compelling presentation.
Two questions here. The first one is on foreign meddling. Is it an issue when it comes to midterms? And if so, do you think the United States is now very vaccinated against foreign influencers now that it was maybe two years ago, four years ago?
And just to follow up on my second question, with the previous question that was asked by my colleague, Pearl, any area – I think this is going to – this has to do with October surprises. Any area beyond the ones that you have already mentioned, from economy to abortion to foreign policy – I think I’m mostly interested in foreign policy – with potential to factor in last-minute that might play a significant role in terms of defining outcomes? What will you be watching at in the months ahead? Thank you so much.
MR BAKER: I wasn’t – actually, I wasn’t quite sure I got the first question. Could you repeat it, please?
QUESTION: Yes, of course. It’s about foreign meddling. Is that —
MR BAKER: Meddling?
QUESTION: Yes, like foreign influencers trying to —
MR BAKER: Okay.
MR BAKER: Yeah, okay. Well, certainly there was a very great amount of concern and controversy over the extent to which Russia had become involved in the 2016 presidential election. And I think there is a general concern among people, particularly in the information area, that foreign countries will meddle electronically, disseminating false information, all kinds of – using all kinds of bots and other things, to spread false information in American elections. That’s always a possibility. There are people that are very susceptible to that, voters who are very susceptible to that.
And the question of October surprises, of course, we’ve had some July surprises. And the July surprises, of course, were the Supreme Court decisions. And it’s an interesting thing to speculate on the durability of a surprise that is sprung or a series of surprises that are sprung in July. Do they have the durability to last until the fall and influence an election taking place on November 6th?
In terms of October surprises in foreign policy, I suppose one possibility would be the collapse of Ukrainian resistance to Russia and Russia’s occupation of Ukraine, which would be a great humiliation to President Biden, who has been so strong in his support of Ukraine. That seems unlikely given the present status of the war and the fact that there has been so much attrition in the Russian Armed Forces in their attack on Ukraine.
Other places in the world that might spring surprises? Oh, I suppose that Kim Jong-un in North Korea could pull something off that might cause people to have anxieties about the possibility of a North Korean missile attack. But certainly, that possibility is open. But right now, I think the leading candidates for events that are influencing the November election are basically the economy and the Supreme Court decisions. I think they will be the largest influences on the election.
MODERATOR: Professor Hughes, do you want to take that question as well?
MR HUGHES: No, I think Ross has done a good job on that one.
MODERATOR: Great. Thank you so much. I’ll turn it over to Ville Hupa. Please go ahead and announce your name and your full outlet as well as ask your question. Thank you.
QUESTION: Thanks very much. Can you hear me?
MR BAKER: Yes.
MODERATOR: Yes, loud and clear. Thank you.
QUESTION: Okay. My name is Ville Hupa. I’m a U.S. correspondent from Finland, from Finnish National Broadcasting Company, the Swedish-speaking section. Thank you so much for your presentations and your insights. Really appreciate it.
First a question to Professor Hughes, and it regards income inequality. To what extent – to what extent has income inequality in the U.S. increased over the past two years and during the pandemic? What does the data say? Can you dig into that a little, please? And to what extent is income inequality a concern for U.S. voters, if at all?
And a question to Professor Baker. It’s pretty straightforward, and obviously the things that you have brought up have already touched this, but what is the main reason, the main factor, behind President Biden’s unpopularity at the moment, which is at historical lows for any president? Correct me if I’m wrong. And it’s not – I can understand that in a polarized climate he is disliked by Republicans no matter what he does, but he seems to be also very unpopular among the Democratic voters. So just in your view, what are the main reasons behind the President’s unpopularity, and how big a burden is that for Democrats going to the midterm elections?
Thank you so much.
MODERATOR: Professor Hughes, do you want to take the first question?
MR HUGHES: Yes. Yeah, income inequality, wealth inequality, has certainly increased during the past two years. One of the driving forces has been initially the boom in the stock market. And stocks are mostly owned by the more wealthy in American society, so the ultra-low interest rates that we had before the current up cycle benefited the more affluent and the like because it drove money into the stock market.
So the second part was – is the housing situation. The U.S. has a deficit in housing. We haven’t been producing enough shelter over the past decade, really, particularly in single-family units. So affluent homeowners have benefited from an unprecedented rise in home prices, increasing their wealth position.
Certainly, income inequality and disparities have gained a lot of traction over the past several years, particularly before the – 2022, when the economic situation changed. And I think an issue will be if people are worried about their own economic situation, what the future holds for them, they’re going to be focusing inward rather than focusing on broader society inequities.
MODERATOR: Thank you, Professor Hughes. Professor Baker, do you want to tackle the other part of the question?
MR BAKER: Yes. The question is having to do with President Biden’s low approval ratings, and particularly among Democrats. Certainly, the Republicans, particularly that portion of the Republican Party that is spiritually attached to former President Trump, that’s a given that almost any Democratic president would be considered someone worthy of opposition.
And the problem among Democrats is low morale, and the low morale I think begins with the response by the White House particularly to the abortion decision – the abortion decision by the Supreme Court. The President waited for more than a week before he actually spoke out on the subject, which, of course, is of great importance to American women who tend to – those who tend to be Democratic.
He also has a problem with younger voters, and there is no question that a 79-year-old president has a kind of great cultural difference between himself and, let’s say, Millennial voters, that people who were born in 2000 or 2002 have a lot of problems with people who are edging up on 80. And the feeling is that part of the – part of the slackness and the slowness of the response to both the abortion decision and the gun decision may be the result of his age.
I think there’s something more complicated going on there. I think it has to do with the communications people in the White House. The President lost a very vigorous press secretary when Jen Psaki decided to take a job with MSNBC, and she was replaced by someone who is a great deal gentler with the media than Jen Psaki was, and I think not quite as aggressive, not quite as ready to push back strongly against particularly hostile questions in the – from journalists.
So the question of opposition to President Biden as far as the Republicans are concerned is kind of baked in. I think that there’s a lot of anxiety among perhaps as many as 25 percent of Republican voters that President Trump is going to run again. In fact, there has been talk recently – in fact within the last couple of days – about the possibility of President Trump announcing his candidacy for the presidency in 2024 before the midterm elections, and a lot of Republicans are very much concerned about what effect that will have on the Republican candidates for the House and Senate.
So, in a sense, President Trump may be doing President Biden a favor by becoming involved somewhat prematurely in the 2024 presidential election. And of course, President Trump’s decision to do this of course is to so-called freeze the field to make sure that no one else announces. Now, whether or not this will be a deterrent to other Republicans is an open question. Certainly Governor DeSantis of Florida I do not think would be deterred from seeking the Republican nomination by President Trump’s announcement. But sometimes very unusual heroes ride to your defense, and I think that President Biden definitely is helped by the January 6th committee’s investigations of the events of the attacks on the Capitol and so on, which all reflect and have reflected very badly on President Trump.
MODERATOR: Thank you so much, professors. We are down to the last three minutes. I don’t know if either of you can stay slightly, about five additional minutes. We have two questions with raised hands. Mounzer Sleiman, if you could ask your question in a truncated manner, kindly, please announce your name and your media outlet. Thank you.
QUESTION: Thank you. Can you hear me?
MR BAKER: Yes.
MODERATOR: Yes, thanks.
QUESTION: This Mounzer Sleiman. I’m with Al Mayadeen network based in Beirut, Lebanon. I am the Washington bureau chief. I was going to ask about the impact of Trump if he announced. It’s already been taken care of. But I would like to ask Professor Hughes about the metric or the indicator. What is the indicator of United States economy entering recession? We hear – what kind of – the single indicator or combination of indicator, and when we can say – because you mentioned the feeling of recession or the sense of recession and the real recession.
Another question for Professor Baker about the role of women in the midterm election. There’s any polling to suggest how the reaction of women in suburbs, not only in cities, about the Supreme Court decision regarding abortion? So is – there is any indication that – the last election, the women was prominent and many women entered the Congress based on popularity and activities of women in the election? Do you think that there is going to be similar enthusiasm by women in the midterm election similar to the last election? Thanks.
MODERATOR: Professor Hughes, over to you first, please.
MR HUGHES: Yeah, the organization that has risen up over decades to be the official arbiter of when we are in a recession or when we are in an expansion is the National Bureau of Economic Research, NBER. They’re located in Cambridge, Massachusetts. It’s a nonprofit, nonpartisan organization, and they have a business cycle dating committee comprising a number of economic experts.
Sometimes it’s assumed that if you have two straight quarters of GDP decline, that’s a measure or a metric of when you’re in a recession. The dating committee says that’s not the case. They use a number of individual variables, metrics, and indicators to determine where we are in the business cycle – expansion, contraction. But unfortunately, they’re usually a year late. Sometimes we’re out of a recession before they tell us when we went into a recession and the like. But there’s no simple indicator or leading – and we do have an index of leading economic indicators, but it has not been very effective in predicting or forecasting recessions.
What’s sort of coincident – a coincident indicator is payroll employment. That’s very important, and that’s released the first Friday of every month. And so it’s a current indicator, relatively timely, and the like. That’s helpful, and again, that has been signaling strong growth recently. Another one would be an inverted yield curve, that is, when short-term interest rates become higher than long-term interest rates. That sometimes signals a recession, but that recession may be a long time coming. But it has been consistent in that the yield curve is inverted before a recession, but sometimes it’s a year later before the recession occurs.
So unfortunately, we look almost on a daily basis of what indicators come out and the like, and some are nongovernmental that are released in terms of credit card data by credit card companies and the like to predict various consumer spending patterns and the like. But truth be told, that’s what keeps economists and academic economists like me in business because there’s no easy way of determining when a recession will start.
MODERATOR: Thank you, Professor Hughes. Over to Professor Baker, please.
MR BAKER: Yes. The question of female voters has always been a pivotal question both in presidential elections and in midterm elections. In fact, there have been various terms that have been coined to identify this particular demographic. “Soccer moms” was a popular phrase used in the 1970s and 1980s. And these are basically women in their 30s, 40s, and 50s with families, and they proved to be pivotal in the 2018 success of the Democrats in that midterm election. They turned very strongly against President Trump and resulted in the election of a number of Democratic women, as a matter of fact, some of which were referred to as national security Democrats – a very interesting collection of female candidates who had backgrounds in national security. Representative Elaine Luria from Virginia was – is one of them; Representative Mikie Sherrill from New Jersey, former Navy helicopter pilot; Representative Elissa Slotkin from Michigan, a former CIA analyst. They were very, very successful. And part of it was the quality of them as quality candidates and also a very, very strong backlash against President Trump.
And my feeling is the extent to which President Trump is visible to voters in the 2022 election is going to be very important, and I think many Republicans are very nervous about the possibility that President – ex-President Trump will announce his candidacy of 2024 before the 6th of November and will again be a factor in the election. After all, he has been defeated. He was defeated in 2020. He – his party was defeated in the midterm elections in 2018. He’s not a good advertisement for Republican candidates running in the 2022 election. So I think that all of these things combined with the fact – as I mentioned before, the Supreme Court decisions, certainly are going to have effect – an impact on the female vote.
The big question is younger voters, and this is, generally speaking, a low turnout group both among young men and young women. Now we’ve seen a great deal of activity, protest activity among younger women in response to the Supreme Court’s abortion decision. If this group gets mobilized, it would add a great deal of – would contribute greatly to the success of Democratic candidates in November.
MODERATOR: Thank you so much, professors. I’ll turn it over to James Kiger to ask the very last question. James, please announce your name and your full outlet before asking the question. Thank you.
QUESTION: Oh, okay. Hi. My name is James Kiger. Can you hear me okay?
MR BAKER: Yes.
MR HUGHES: Yes.
QUESTION: Oh, cool, cool, cool. I’m from Nippon Television. We were talking about July surprises and October surprises, and since you guys are both academics, I was really interested. In the coming months, President Biden is going to make a decision on student loan debt, and I was wondering how you feel that will affect the midterm elections.
MR HUGHES: I’ll defer to Ross on that.
MR BAKER: I’ll defer to you on that. (Laughter.)
QUESTION: Yeah, it’s both an economic and midterm question, sir.
MODERATOR: Professor Hughes, why don’t you tackle it first and then we can pass it to Professor Baker.
MR HUGHES: Sure. Oh, I think there’s many, many individuals out there who are saddled with student debt, and if that debt were significantly reduced or eliminated, that would certainly be a very, very strong endorsement for President Biden and the like. The only negatives to that would be, really, what does that do to the national deficit and the like, but I don’t think people are worrying about the national deficit at present.
MR BAKER: I think that it would certainly be obviously very, very, very helpful to those people who have significant debt associated with attendance at colleges and universities. But there are many, many Americans who don’t – didn’t attend college and universities, didn’t incur student debt, have other kinds of debt. And favoring a group with college educations who, generally speaking, have better chance of getting a good-paying job, may be resented by people who don’t have college educations and look upon it as a bailout of privileged people.
MODERATOR: Well, thank you so much. We are out of time. On behalf of the U.S. Department of State, I would like to thank Professor Hughes and Professor Baker from Rutgers University for speaking to the foreign press today. Today’s briefing was on the record. I will share a transcript with everyone who is participating today and it will also be posted on our website, fpc.state.gov.
The next briefing in our Election 2022 series will be on the Latino vote. We look forward to seeing you all there. Thank you all and have a wonderful day.
MR BAKER: Thank you, Mahvash.
MR HUGHES: Thank you.