Connect with us

Economics

The Biden campaign in Michigan has a tremendous ground-game advantage

Published

on

Standing in front of a few dozen Democratic Party members in a shopfront in Ypsilanti, a town just south-east of Ann Arbor, Debbie Dingell, a congresswoman from Michigan, delivers the bad news. “None of you believed me in 2016 when I said that Donald Trump could win,” she says. “Too many people don’t know why we gotta elect Joe Biden. We aren’t talking about what he’s gotten done the last four years.” She then goes on to list half a dozen reasons why Mr Biden’s re-election is crucial, starting with the environment, women’s reproductive rights, the economy, health care and then finally, how Donald Trump is “splitting Americans apart” with his violent rhetoric. “It’s more important now than it’s ever been to turn out the votes,” she concludes. “Ground Zero is right here right now.”

Ms Dingell was speaking at the opening of one of 30 campaign offices that Mr Biden’s campaign will soon have operating across the Wolverine State, a decisive swing state during the past two presidential elections. In 2016 Mr Trump won Michigan with a margin of just 0.3%. In 2020 Mr Biden took it back for the Democrats by 2.8%. State Democratic officials are confident that they can repeat the trick this year, and they cite a remarkable campaigning machine built since 2017 as evidence. “We are organising and talking to voters all the time,” says Lavora Barnes, the Democratic chairwoman. But Ms Dingell’s warning rings true too. Michigan is thus a good place to take the pulse of Mr Biden’s campaign. The president is running a traditional playbook, while Mr Trump’s approach to electioneering is as unconventional as ever.

Ms Barnes is right that Democrats have a significant organisational advantage over their opponents. Nationwide Mr Biden’s campaign committee has raised $129m to $96m raised by Mr Trump, and the cash is flowing into Michigan. As well as opening offices, the party is hiring staffers at pace. Phenomenally peppy 20-somethings are moving from all over the country to take up campaign jobs. An army of pensioners with lots of free time is already equipped with yard signs and bumper stickers to distribute to their neighbours.

By contrast, Mr Trump’s campaign is far less visible. On April 2nd the former president held a modest rally in Grand Rapids, attended mostly by journalists and local Republican officials. But the campaign is only now “putting in place the building blocks” of its organisation, says Pete Hoekstra, the party chairman. “We are not counting offices,” he says, when asked if any have opened yet. For much of the past year, Michigan Republicans have been in disarray. In January members voted to oust their chair, Kristina Karamo, a vocal proponent of the theory that the 2020 election was rigged, over complaints that she was mismanaging the party and its finances. In the end it took a lawsuit to get her to step down. At one point last year a dispute between two party officials ended in a physical fight, with a county chairman apparently complaining that a fellow activist had “kicked me in my balls”.

Yet a ground-game advantage does not guarantee that Mr Biden will win the state. Most evidence from political science suggests that door-knocking has at most a marginal effect, generally by boosting turnout. It certainly cannot replace a persuasive message. The early campaign suggests that Democrats may have too many points to make and have yet to craft a unified argument.

Take for example the talking points of Gretchen Whitmer, Michigan’s popular Democratic governor. Asked at another office opening, this one in Livingston County, a Republican-leaning suburb north-west of Detroit, what she expects the message of the election to be, at first she replies frankly: “Everything’s about the economy.” But then she adds: “Our ability to make our own decisions about our body, when and whether or not to bear a child, that is the most important economic decision a woman will make over the course of her lifetime.” In addition, she continues, education and climate change matter, as does “onshoring supply chains”. These things, she says, are “all going to be absolutely central to what’s on voters’ minds.”

The breadth of the message reflects the challenge Democrats face in Michigan, particularly at presidential level. To beat Mr Trump, the party needs to make sure that committed Democrats turn out in large numbers, particularly in the state’s urban strongholds in Detroit and Ann Arbor. Already that base is rather divided. It includes college students, black blue-collar workers, white professionals, the liberal elderly and the more unionised of the white working class. A few older activists in Livingston mentioned unprompted their disdain for digital campaigning, arguing that it doesn’t persuade anyone new. By contrast, young voters are deeply online. “I really think that a lot more people now get their beliefs based off of, like, Instagram and TikTok,” says Jacob Welch, the president of Michigan’s College Democrats organisation. He worries that Mr Biden’s support for Israel in Gaza is putting young voters off.

What unites the base most is, as Mr Welch puts it, that they all “despise Donald Trump”. But the party also needs to win over at least a few people who might be tempted to vote for him. Ms Barnes says that one of the reasons Hillary Clinton lost the state in 2016 was that she prioritised making sure solid Democrats turned out to vote, and neglected trying to persuade people on the fence. “There was a lot of focus on just turnout,” particularly in big cities, she says. Now they are trying to reach areas Democrats don’t usually touch—hence the opening of offices in places like Livingston. “I think that there are a lot of fair-minded, thoughtful folks who have voted Republican in the past,” she says.

The tricky thing is that those voters may require different messages, and sometimes they pull across each other. The voters Mr Biden needs to tempt away are also a diverse mix. They include wealthier, more socially liberal suburban Republicans but also blue-collar workers. Jacob Hilliker, the Michigan representative for LiUNA, a large trade union that represents mostly workers in the construction trade, and which has endorsed Mr Biden, says the case for Mr Biden for his union members is that “he’s done nothing but make it rain jobs like nobody has before”. When asked about the appeal of culture-war issues, such as abortion or IVF, he demurs. “I have my personal views on abortion rights, guns, the right to hunt in Michigan,” he says, without specifying what they are. “We are here to fight for jobs.”

Mr Trump’s message, by contrast, is crude but simple. “You’re under an invasion,” he told his audience in Grand Rapids. Flanked by a gaggle of sheriffs, and two television screens showing a chart of border crossings, he argued that Joe Biden is letting criminal “illegal aliens” and useless Chinese electric cars flood into Michigan. (He said the crime rate in Venezuela has fallen, which is true, and suggested it is because so many wrong-uns have been sent to America, which is not.) To fix this, he proposes to whack monstrous trade tariffs on Mexico, to stop Chinese firms building cars there, and to “begin the largest domestic deportation operation in the history of our country”. For good measure he also added that he would give police officers accused of wrongdoing complete immunity from litigation.

Shawn Fain, the leader of the United Auto Workers union, says Mr Trump “is like the third-grader running for class president, you know, he wants to give a free candy machine to everybody in the class.” He points out that when the union went on strike last year, Mr Biden visited them, whereas Mr Trump, as president, shunned a strike in 2019. But even Mr Fain admits he sometimes has to work to persuade his members. “You can claim you love Trump or whatever the hell your reasoning is. And if you do that, so be it. I feel for you. But at the end of the day, facts are facts,” he says. “He’s just flat-out a con man.”

Mr Biden’s best hope is to pull all these strands together over the next seven months. In Livingston County, Dan Luria, the county party vice-chairman, adds his own ideas. Mr Biden, he says, ought to “reappropriate the concept of freedom”. Freedom, he says, ties everything together—from reproductive rights to the economy. Also, he adds, you can put out a lot of American flags. That is one bit of advice the Biden campaign is sure to follow.

Stay on top of American politics with The US in brief, our daily newsletter with fast analysis of the most important electoral stories, and Checks and Balance, a weekly note from our Lexington columnist that examines the state of American democracy and the issues that matter to voters.

Economics

UK inflation, November 2024

Published

on

The columns of Royal Exchange are dressed for Christmas, at Bank in the City of London, the capital’s financial district, on 20th November 2024, in London, England.

Richard Baker | In Pictures | Getty Images

LONDON — U.K. inflation rose to 2.6% in November, the Office for National Statistics said Wednesday, marking the second straight monthly increase in the headline figure.

The reading was in line with the forecast of economists polled by Reuters, and climbed from 2.3% in October.

Core inflation, excluding energy, food, alcohol and tobacco, came in at 3.5%, just under a Reuters forecast of 3.6%.

Headline price rises hit a three-and-a-half year low of 1.7% in September, but was expected to tick higher in the following months, partly due to an increase in the regulator-set energy price cap this winter.

“This upwards trajectory looks set to continue over the next few months,” Joe Nellis, economic adviser at accountancy MHA, said in emailed comments on Wednesday, citing the energy market and “the long-term pressure of a tight domestic labor market.”

Persistent inflation in the services sector, the dominant part of the U.K. economy, has led money markets to price in almost no chance of an interest rate cut during the Bank of England’s final meeting of the year on Thursday. Those bets were solidified earlier this week when the ONS reported that regular wage growth strengthened to 5.2% over the August-October period, up from 4.9% over July-September.

The November data showed services inflation was unchanged at 5%.

If the BOE leaves monetary policy unchanged in December, it will finish out the year with just two cuts of its key rate, bringing it from 5.25% to 4.75%. The European Central Bank has meanwhile enacted four quarter-percentage-point cuts and this month signaled a firm intention to move lower next year.

The U.S. Federal Reserve is widely expected to trim rates by a quarter point at its own meeting on Wednesday, taking total cuts of the year to a full percentage point. Some skepticism lingers over whether it should take this step, given inflationary pressures.

This is a breaking news story and will be updated shortly.

Continue Reading

Economics

The Fed has a big interest rate decision coming Wednesday. Here’s what to expect

Published

on

Federal Reserve Chair Jerome Powell speaks during a news conference following the November 6-7, 2024, Federal Open Market Committee meeting at William McChesney Martin Jr. Federal Reserve Board Building, in Washington, DC, November 7, 2024. 

Andrew Caballero-Reynolds | AFP | Getty Images

Inflation is stubbornly above target, the economy is growing at about a 3% pace and the labor market is holding strong. Put it all together and it sounds like a perfect recipe for the Federal Reserve to raise interest rates or at least to stay put.

That’s not what is likely to happen, however, when the Federal Open Market Committee, the central bank’s rate-setting entity, announces its policy decision Wednesday.

Instead, futures market traders are pricing in a near-certainty that the FOMC actually will lower its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points. That would take it down to a target range of 4.25%-4.5%.

Even with the high level of market anticipation, it could be a decision that comes under an unusual level of scrutiny. A CNBC survey found that while 93% of respondents said they expect a cut, only 63% said it is the right thing to do.

“I’d be inclined to say ‘no cut,'” former Kansas City Fed President Esther George said Tuesday during a CNBC “Squawk Box” interview. “Let’s wait and see how the data comes in. Twenty-five basis points usually doesn’t make or break where we are, but I do think it is a time to signal to markets and to the public that they have not taken their eye off the ball of inflation.”

Former Kansas City Fed Pres. Esther George: I would not cut rates this week

Inflation indeed remains a nettlesome problem for policymakers.

While the annual rate has come down substantially from its 40-year peak in mid-2022, it has been mired around the 2.5%-3% range for much of 2024. The Fed targets inflation at 2%.

The Commerce Department is expected to report Friday that the personal consumption expenditures price index, the Fed’s preferred inflation gauge, ticked higher in November to 2.5%, or 2.9% on the core reading that excludes food and energy.

Justifying a rate cut in that environment will require some deft communication from Chair Jerome Powell and the committee. Former Boston Fed President Eric Rosengren also recently told CNBC that he would not cut at this meeting.

“They’re very clear about what their target is, and as we’re watching inflation data come in, we’re seeing that it’s not continuing to decelerate in the same manner that it had earlier,” George said. “So that, I think, is a reason to be cautious and to really think about how much of this easing of policy is required to keep the economy on track.”

Fed officials who have spoken in favor of cutting say that policy doesn’t need to be as restrictive in the current environment and they don’t want to risk damaging the labor market.

Chance of a ‘hawkish cut’

If the Fed follows through on the cut, it will mark a full percentage point lopped off the federal funds rate since September.

While that’s a considerable amount of easing in a short period of time, Fed officials have tools at their disposal to let the markets know that future cuts won’t come so easily.

One of those tools is the dot-plot matrix of individual members’ expectations for rates over the next few years. That will be updated Wednesday along with the rest of the Summary of Economic Projections that will include informal outlooks for inflation, unemployment and gross domestic product.

Another is the use of guidance in the post-meeting statement to indicate where the committee sees policy headed. Finally, Powell can use his news conference to provide further clues.

It’s the Powell parley with the media that markets will be watching most closely, followed by the dot plot. Powell recently said the Fed “can afford to be a little more cautious” about how quickly it eases amid what he characterized as a “strong” economy.

“We’ll see them leaning into the direction of travel, to begin the process of moving up their inflation forecast,” said Vincent Reinhardt, BNY Mellon chief economist and former director of the Division of Monetary Affairs at the Fed, where he served 24 years. “The dots [will] drift up a little bit, and [there will be] a big preoccupation at the press conference with the idea of skipping meetings. So it’ll turn out to be a hawkish cut in that regard.”

What about Trump?

Powell is almost certain to be asked about how policy might position in regard to fiscal policy under President-elect Donald Trump.

Thus far, the chair and his colleagues have brushed aside questions about the impact Trump’s initiatives could have on monetary policy, citing uncertainty over what is just talk now and what will become reality later. Some economists think the incoming president’s plans for aggressive tariffs, tax cuts and mass deportations could aggravate inflation even more.

“Obviously the Fed’s in a bind,” Reinhart said. “We used to call it the trapeze artist problem. If you’re a trapeze artist, you don’t leave your platform to swing out until you’re sure your partner is swung out. For the central bank, they can’t really change their forecast in response to what they believe will happen in the political economy until they’re pretty sure there’ll be those changes in the political economy.”

“A big preoccupation at the press conference is going to the idea of skipping meetings,” he added. “So it’ll turn out to be, I think, a hawkish easing in that regard. As [Trump’s] policies are actually put in place, then they may move the forecast by more.”

Other actions on tap

Most Wall Street forecasters see Fed officials raising their expectations for inflation and reducing the expectations for rate cuts in 2025.

When the dot plot was last updated in September, officials indicated the equivalent of four quarter-point cuts next year. Markets already have lowered their own expectations for easing, with an expected path of two cuts in 2025 following the move this week, according to the CME Group’s FedWatch measure.

The outlook also is for the Fed to skip the January meeting. Wall Street is expecting little to no change in the post-meeting statement.

Officials also are likely to raise their estimate for the “neutral” rate of interest that neither boosts nor restricts growth. That level had been around 2.5% for years — a 2% inflation rate plus 0.5% at the “natural” level of interest — but has crept up in recent months and could cross 3% at this week’s update.

Finally, the committee may adjust the interest it pays on its overnight repo operations by 0.05 percentage point in response to the fed funds rate drifting to near the bottom of its target range. The “ON RPP” rate acts as a floor for the funds rate and is currently at 4.55% while the effective funds rate is 4.58%. Minutes from the November FOMC meeting indicated officials were considering a “technical adjustment” to the rate.

Expect a 'hawkish cut' from the Fed this week, says BofA's Mark Cabana

Continue Reading

Economics

Iran faces dual crisis amid currency drop and loss of major regional ally

Published

on

A briefcase filled with Iranian rial banknotes sits on display at a currency exchange market on Ferdowsi street in Tehran, Iran, on Saturday, Jan. 6, 2018.

Ali Mohammadi | Bloomberg | Getty Images

Iran is confronting its worst set of crises in years, facing a spiraling economy along with a series of unprecedented geopolitical and military blows to its power in the Middle East.

Over the weekend, Iran’s currency, the rial, hit a record low of 756,000 to the dollar, according to Reuters. Since September, the embattled currency has suffered the ripple effects of devastating hits to Iran’s proxies, including Lebanon’s Hezbollah and Palestinian militant group Hamas, as well as the November election of Donald Trump to the U.S. presidency.

With the fall of Syrian President Bashar al-Assad amid a shock offensive by rebel groups, Tehran lost its most important ally in the Middle East. Assad, who is accused of war crimes against his own people, fled to Russia and left a highly fractured country behind him.

“The fall of Assad has existential implications for the Islamic Republic,” Behnam ben Taleblu, a senior fellow at the Foundation for Defense of Democracies in Washington, told CNBC. “Lest we forget, the regime ahs spent well over a decade in treasure, blood, and reputation to save a regime which ultimately folded in less than two weeks.”

The currency’s fall exposes the extent of the hardship faced by ordinary Iranians, who struggle to afford everyday goods and suffer high inflation and unemployment after years of heavy Western sanctions compounded by domestic corruption and economic mismanagement.

Trump has pledged to take a hard line on Iran and will be re-entering the White House roughly six years after unilaterally pulling the U.S. out of the Iranian nuclear deal and re-imposing sweeping sanctions on the country.

Iranian President Masoud Pezeshkian has expressed his government’s willingness to negotiate and revive the deal, officially known as the Joint Comprehensive Plan of Action, which lifted some sanctions on Iran in exchange for curbs to its nuclear program. But the attempted outreach comes at a time when the International Atomic Energy Agency says Tehran is enriching uranium at record levels, reaching 60% purity — a short technical step from the weapons-grade purity level of 90%.

Continue Reading

Trending