(dramatic classical music) - Did my legs shrink?

I can move them.

I mean, I knew Alaska Airlines Premium Class had extra legroom, but this, this feels different.

Okay, crazy idea.

On the count of three, I'm going to try and cross my.

Oh boy.

That's nice.

Woo hoo hoo.

(dramatic classical music continues) (light music) (gentle music) (light music) - And now, the Cascade PBS Ideas Festival, featuring journalists, newsmakers, and innovators from around the country in conversation about the issues making headlines.

Thank you for joining us for The Journal: Economy Anxiety and the Election with Molly Ball, moderated by Kate Linebaugh and Ryan Knutson.

Before we begin, a special thank you to our stage sponsor, Alaska Airlines, and our founding sponsor, The Kerry & Linda Killinger Foundation.

Finally, thank you to our host sponsor, Amazon.

(light music continues) (audience applauding) - All right, hello everyone, welcome to the Cascade PBS Ideas Festival.

I'm Ryan Knutson, co-host of "The Journal" podcast.

We're a co-production of Spotify and "The Wall Street Journal."

And today I'm joined by my cohost, Kate Linebaugh, and "Wall Street Journal" political reporter Molly Ball for a discussion about this weird economy that we're living in right now.

Is it good?

Is it bad?

And what might this all mean for the presidential election?

- Okay, so today, we have a great topic, and no one better to talk about it than Molly Ball.

It is what we are calling the rematch: Trump and Biden.

- So the economy has historically taken a very big role in elections.

Usually, when the economy is good, incumbents get reelected, and when the economy is bad, incumbents lose.

But there's a very weird thing going on in the country right now, which is that, if you look at the data, if you look at the metrics, the economy's actually performing pretty well.

But Americans feel pretty pessimistic about where the economy is and where it's headed.

So we're gonna talk about how those feelings are shaping the 2024 election and how much they really even matter in a rematch between Joe Biden and Donald Trump.

- And Molly Ball, welcome.

- Hi, thanks so much for having me.

I'm excited to talk about this.

So does the economy matter?

The answer is yes, next question.

(panelists laughing) - How important is this weird economy to this election?

- So I think it's very important, you know?

In polls, if you ask people what is the most important issue when you think about your vote for president, most of the time, people will say something having to do with the economy.

Politics is largely, you know, the way that we distribute resources in our society, and people see the election of the president largely in terms of the pocketbook issues, the bread and butter issues that affect their lives.

A couple caveats to that.

First of all, as you noted, the types of economic factors we're talking about are different in this election than maybe in the past.

People's perceptions of the economy are extremely negative.

At the same time, majorities of people in most polls say that their personal economic situation is good.

So this isn't necessarily people feeling like they, themselves, are struggling, are crunched.

Certainly some people are, but it's a much more pervasive sense of like doom and gloom that's sort of atmospheric and goes with the fact that people broadly see the country being on the wrong track.

In addition, in a lotta polls for the past several months, the economy hasn't been people's top issue.

It's been immigration.

And that is an issue that I think strongly favors Trump.

It's an issue that he's made much more salient to the national discourse, while of course, at the same time, we do have, you know, these record levels of migration on the southern border that I think have played into people's concerns about that.

And then, you know, there are other issues that I think we expect to play an important role in the election.

Abortion is an issue that people don't tend to name as their number one issue, but we see it being a very strong motivator for voting and for registration across the board really, not just among women voters or among young voters.

But voters in all kinds of states, including deep red states, have come out to vote in favor of abortion rights.

And let's not forget, Roe v. Wade was overturned less than two years ago.

So this is the first presidential election since Roe v. Wade was overturned.

So we have no idea how that issue's going to play out in a presidential race.

It's never happened before.

And so yes, I think the economy, obviously, is very broadly important in the presidential election, but potentially in some unpredictable ways.

- All right, so on paper, the economy is doing pretty well.

Unemployment is low.

Wages are rising more than they have been in the past, especially at the low end.

Inflation is coming down, but obviously, it's not gone away completely.

Yet voters say they feel very pessimistic about the economy.

So why do you think that there's such a disconnect?

- Well, I think, you know, Ronald Reagan classically asked, posed to voters this very simple question: "Are you better off today than you were four years ago?"

Well, four years ago today, we were at the height of the sort of early phase of the COVID pandemic.

And I think we can't lose sight of what a disruption that was to the economy and to people's lives and that it continues to have sort of long-tail effects.

And I think it plays a big role in the way people perceive the economy as well.

I often hear, you know, from Democrats or the Biden campaign that, you know, Biden created millions of jobs and Trump presided over a loss of millions of jobs.

But I think people broadly attribute that to the pandemic, right?

The pandemic wiped out millions of jobs at a rapid clip, and then there were some very unusual, you know, trillions of dollars in government spending that were authorized by both presidents in order to address that, potentially leading to some of the inflation that we've seen.

And so I think, you know, in the same way that voters broadly don't seem to blame Trump for that loss of jobs that was attributed to the pandemic, they don't give Biden that much credit for the jobs having bounced back.

Because it's seen as almost like a naturally occurring phenomenon, right?

It was sort of like a natural disaster that no human was sort of responsible for.

So I think that's one big factor.

And then, and the other thing about the sort of COVID hangover is, I think it really contributed to people's sense of instability.

And I think that's a lot of what's behind these pessimistic perceptions about the economy and about the fate of the country generally.

Is people just don't feel like they can trust the way things are.

There's a feeling like it's hard to budget when prices keep going up in unpredictable ways.

And one day it's the price of cars, and the next day it's, you know, you can't get a mortgage under 5%.

- And groceries.

- And groceries.

And so I think people just feel sort of buffeted by this lack of certainty in their lives, and they'd like to see, you know, some feeling of safety that they don't feel they've achieved.

- Well, one of the things I sorta wonder about, I mean, as a millennial is like, are we judging the economy by the right metrics?

Like there's these historical measures that we always look at for like is the economy doing well or doing poorly, unemployed data, things like that.

But even if you have a job today, there's a lotta people who feel like, "So what, I have a job, I can barely survive.

There's no hope for me to ever own a home.

I can't afford to have kids.

It just feels like the economy as it's sort of structured doesn't really work."

So even if the data is good, it doesn't necessarily mean that people feel good about what it means to be an American living in the US these days.

- I think that's right.

And I think you also see that broadly expressed, you know, on social media and on, you know, a medium like TikTok, where now, and this also wasn't the case in the last presidential election four years ago, but according to Pew, 1/3 of adults under 30 are getting their news mainly from TikTok.

So what does TikTok give you?

It gives you the unfiltered perceptions of a lot of random people.

And a lot of them are complaining about their lives.

(Ryan laughing) And so that's not necessarily- - Dance moves?

- And objective picture of, you know, the broad, like, statistical economy, where, you know, the stock market's up and people have jobs and that kinda thing.

- Right, but interest rates are so high now that people notice.

(laughing) - Oh, for sure.

- Right, like it was like this super low interest rate environment.

Rates are now high.

People on our team are like interested in interest rates.

- (laughing) Well, well, we have to talk about inflation, right?

Because I'm old enough to remember the financial crisis in 2008, and that took a very long time for the American economy to recover from.

So for a long time, the principal economic problem that we had was a lack of jobs.

Unemployment was relatively high, and people didn't have, you know, stable employment.

And so for months at the beginning of this sort of election cycle, I think out of habit as much as anything else, you had President Biden going out there saying, "Jobs, jobs, jobs," and that was always sort of what every politician said.

Jobs aren't the problem right now.

Unemployment's been under 4%, which is crazy, and it's been that way for a long time.

And you know, you drive past the McDonald's and they're offering a starting wage of, you know, 25, $30 an hour.

What we have is a labor shortage, which contributes to inflation.

And what we had, you know, a couple years ago was very high inflation of the sort that most of us have not experienced in our lifetimes.

And well, President Biden has.

(Ryan laughing) But I haven't.

(audience laughing) - I have.

(laughing) - And, again, this is disconcerting for people.

This is something that many people have not grappled with before.

And I think, as a worldwide phenomenon, people hate inflation, right?

You see populist revolts going on all over the world in places where there's high inflation.

And you know, protests, riots, that kinda thing.

It's just an economic phenomenon that really, that people really do not like.

And the cure then is almost as bad as the disease, right?

- Right.

- Because the way you bring down inflation is to hike interest rates.

And that means people's cost of housing goes up.

People's mortgage costs go up.

- Right.

- People find it harder to move or to find new housing.

And so I think people sorta feel like they're being hit on both ends here.

- And how is that factoring into the presidential election - Well, when people are unhappy, they throw out incumbents.

(laughing) - So is Trump jumping on it?

- One thing that is very interesting, you know, throughout Trump's term as president, he was very unpopular.

But number one, his image as a businessman has persisted.

We can quibble with whether that was ever true.

(laughing) - Right.

- He was really mainly a TV star in terms of the way he made his money.

But people still think of him as a businessman, as an outsider, as a sort of non-politician.

And then, people look back on the Trump presidency, we're seeing now, with a fair amount of nostalgia.

People, you know, Trump, again, Trump's approval rating was low while he was president, but now as people look back on his presidency, they rate it much higher.

You see, you know, ratings of, you know, 50% or even higher for how did you like it when Trump was president, which is much higher (laughing) than his actual approval rating was while he was in office.

So there's a sort of, you know, rose-colored glasses effect here, in part because people are just so unhappy with the status quo.

They feel like it was better back then.

- And January 6th doesn't change that?

- Well, it probably does for some people.

- Yeah.

- But not for everybody.

- Not for 50% of the people?

- Well, 40.

- Is that- (panelists laughing) Is that normally the case for past presidents where people look back on their presidency- - Yeah.

- And think, "Oh, it actually wasn't so bad," or is it just because we're now in an election again where Trump is back and sort of maybe like saying- - Yeah.

- "I was great.

Don't you remember all the great times?"

And people are hearing that.

- You know, that's such a good point, which is like, I think we don't stop to point out enough how unusual it is to have a former president run for office again, right?

They never do that.

They haven't done that for more than a century.

- They'd make a library.

- Yeah.

Well, they usually- - (laughing) Or paint pictures.

- Admit that they lost too.

(panelists laughing) So another novel phenomenon going on here.

But so because of that, right, and so I think the answer to your question, Ryan, is yes, right?

George W. Bush left office as a very unpopular president.

Today, he's seen as this like lovely, sort of uniter and people don't remember a lot of the reasons that they disliked him when he was in office.

So I think it is true that presidents after they leave office tend to get more popular in retrospect.

Everything is going to be, you know, hotly litigated and divisive in the heat of the moment when the president's actually in office.

So that probably has something to do with it.

- So let's talk about Biden's economy, right?

Now like, what is Bidenomics?

How would you describe how the economy is doing under Biden right now?

- So I think Biden is a really interesting president on economic policy, very different than the Obama agenda, really, on economics, right?

Where Obama, I think it's fair to say, was sort of a neoliberal Democrat.

And part of the reason that the recovery from the financial crisis was so slow was because there was a reluctance to, you know, to spend too much money, to apply really massive stimulus to the economy.

And I think there's a view that Biden's team may have overlearned that lesson and overstimulated the economy at a time when a different balance was warranted.

But we've seen, I think, a very sort of activist, sort of left populist agenda from Biden, where you know, he's appointed some very aggressive agency heads, like Lina Khan at the FTC, who've really gone after big business.

Trillions of dollars in stimulus and infrastructure spending that have probably contributed to inflation.

Trade policy, he's continued a lot of Trump's tariffs.

So really leaning into the sort of industrial policy ideas on the left in a way that Obama certainly did not.

And there's another policy that probably contributes to inflation.

So for awhile, they were trying to make Bidenomics a thing.

It actually originated with Republicans making fun of Bidenomics and saying it was terrible and they were, "Well, we're gonna reclaim it, just like Obamacare.

We're gonna say it's a good thing."

That seemed to fall pretty flat.

They've started to move away from that now, because people just weren't buying it.

- Well and I also, I mean, I think the biggest issue, I think, in the economy right now in inflation, which is something that presidents don't really have that much control over.

- Yeah, it's a real problem, I think, for any president, and it's why political leaders tend to get punished so harshly for inflation is that there isn't very much they can do about it.

You know, Biden did reappoint the Federal Reserve chair, Jerome Powell, who has been given a lot of credit for helping to steer the economy toward potentially a so-called soft landing.

- Soft landing.

- This is one of our favorite phrases at "The Wall Street Journal," is it not?

- Yeah.

- But- - A lot on our podcast.

- Which means that, you know, able to bring down inflation without causing a recession, which is very tricky.

And if he pulls it off, I think, it's a pretty commendable achievement.

But it's not something that voters are in the mood to give much credit for.

- And it's not something that Biden would get credit for.

Or do voters give the president credit for the policy of the Federal Reserve?

- You know, it's interesting.

I think people are just in a bad mood.

(audience and panelists laughing) They really are.

- We're not.

- They hate everything.

(Ryan laughing) Oh yeah, my life's great, but I'm an out-of-touch elite, right?

People are in a really bad mood, you know?

They feel negatively about the country.

They feel negatively about politics and politicians.

And I think we've been in this sort of change-oriented, you know, ant-establishment, anti-incumbent mood for awhile as a country.

But certainly, you know, the Trump era and the divisiveness that he introduced in a lot of ways, people feel just really bad about everything.

- So how would you rank for Biden what the top issues are for him?

Economy, age, climate change.

Like what are the things that you, how would you rank them for him in terms of the baggage, I guess you could say, that they carry?

- Ah, the negative issues.

Well, I was thinking about, like, what are the issues he wants to talk about?

So I'll start there, right?

When you talk to the Biden campaign, to Democrats, they've got a sort of two-word heuristic for how they want to steer the conversation in this election, and it's democracy and Dobbs.

They feel like, in the midterms, which went better for Democrats than most people were anticipating, that was sorta the key.

Democrats have been overperforming in a lot of local special elections since Trump left office.

And these are the issues that Democrats would like to focus on and call voters' attention to: democracy, the threat to democracy that Trump arguably represents, January 6th, all of that, and the Dobbs decision, which has inspired a massive sort of popular revolt against this taking away of people's rights and freedoms and which we have seen be a political winner, you know?

Every time abortion has been on the ballot since Roe was overturned, it has won, even in Montana, in Ohio, in Kentucky.

So we see a lot of voters motivated to come to the polls by that issue.

And it's potentially going to be on the ballot as a single issue in some very crucial potential swing states: Arizona, Florida, potentially Nevada and others.

So that's what, those are the issues that Democrats view as strong for Biden, that they would like to keep the focus on.

- Should we talk about Trump?

- Let's talk about Trump.

What is his message, that he's gonna bring the economy back to the boom times that he had?

- That's basically it.

That's basically it.

And it doesn't get a lot more complicated.

And in fact, a lot of the things that Trump is proposing would probably lead to more inflation, right?

He's saying he's gonna massively increase tariffs, particularly on China.

He's talking about doing a lot of other sort of protectionist measures in the economy.

Now, he's also talking about a lot of deregulatory initiatives that might have an anti-inflationary effect.

But most of it is vibes.

Most of it is him saying, "When I was president, the economy's good.

I'm gonna make it great again," to coin a phrase.

- How central is the economy to his campaign right now?

- Well, it's interesting, because, as you may have noticed, he's kind of easily distracted.

(audience laughing) And he really loves to talk about immigration.

He loves to talk about, you know, his personal grievances.

So I remember, you know, when he was president and had just passed this big tax cut that was sort of his major congressional achievement, the Republican Party kept wanting him to go out and sell it.

And he would go out to campaign and talk about immigration instead.

'Cause he just thinks it's sexier, for lack of a better word.

So he, and you know, I see him campaign quite a bit, and he tends to focus much more on, you know, personal grievances, the globalists, the deep state, the enemies.

It's a very sort of, you know, oppositional politics that he practices, so it's much more about his enemies and people who have wronged him, and by extension, the American public.

- What are his main criticisms of Biden's economic policies?

- Well again, they're not very specific.

(laughing) But the criticism is just basically that Biden has not been a good steward of the economy.

And you know, one thing that Trump did a lot when he was president was yell at the Federal Reserve to keep interest rates low, which was a violation of the Fed's traditional independence.

And we have done some reporting that he might seek to actually tear down that wall completely.

- That his advisors are drafting a plan to do that if he- - They are drafting a plan that would eliminate- - Yeah.

- The traditional independence of the Federal Reserve.

And so he's always seen it as a political winner to keep rates low, which again, would potentially lead to more inflation, but which he thinks would be popular.

- So neither candidate is focusing on the economy, despite the fact that it's what motivates voters?

- I think that's fair.

I mean, I don't know if I can recall a presidential election where the candidates, the candidates always talk about the economy and say they're gonna make your life better.

- Right.

- But are they usually going out there with a white paper about, like, "Here's, you know, what I'm gonna propose and here's how I'm gonna do it?"

And you know, the president has a limited capacity to actually control the economy.

He can propose an agenda, propose a budget to Congress, but really has not a lot of direct control over the way the economy goes.

- I wanna ask one more question about the economy.

One of the big features of Trump's presidency is, in 2016, was tariffs on China and importing or putting taxes on imports, which obviously has a big inflationary effect.

If you make imports more expensive or you make them impossible to ship, they can create supply chain issues.

And yet, inflation is now a big issue in the economy.

So has he tempered that messaging at all, or is still talking about, if he becomes president again, that he'll bring back more tariffs on imports?

- He's still all-in on tariffs.

But as I mentioned before, you know, this administration has also kept most of Trump's tariffs in place.

And you know, trade policy, and thank you for that little Econ 101 lesson.

I think that was very informative and correct.

- I try.

- But you know, tariff policy is this fascinating area where we're on the Big Ideas stage, my big idea is I think we are in a moment of political realignment, right?

For decades, we had a basic agreement between the parties that tariffs were bad.

And when Republicans or Democrats, usually when they were campaigning, they'd lie and say they hated NAFTA, but then they would come into office and broadly pursue free trade policies.

Admitting China to the WTO, continuing to break down tariffs and barriers all over the world.

And a lot of political scientists believe that this is one of the major sources of, you know, the angst and sort of populist revolt that helped make Trump president.

Certainly, the reason he was able to win states like Michigan, Wisconsin, and Pennsylvania, where decades of free trade policy had led to a lotta jobs, particularly manufacturing jobs, disappearing overseas and so many, you know, little towns in those communities, in those states, just being completely hollowed out and left behind by the modern economy.

So but Joe Biden comes from the much more sort of populist, sort of union-based, lunch bucket wing of the Democratic Party.

And that is a part, and he's got a lot of advisors around him who are much more interested in some of these new left ideas around things like industrial policy, antitrust, competition policy.

And so he has put a much greater emphasis on some of these populist economics that actually overlap quite a bit with Trump's.

- Given that this is the deja vu election, is there anything that's gonna be surprising between now and November?

- Well yeah, I mean, I don't know who's gonna win.

Do you?

And if you do- - No, I mean like- - Could you please tell me?

(panelists laughing) - Like in the fall, there's always like, oh, something's gonna come out about one of the candidates.

- Yeah.

- But we've been through- - We kinda know, yeah.

- This election already.

- Look, this is going to be a fascinating election.

I don't think we're going to learn a lot more about the candidates, to your point, right?

But that doesn't mean there's not gonna be a lot at stake and a lot happening between now and November.

I mean, we have a brand new war just in the last six months overseas, so there's always unanticipated events that leaders have to respond to and take positions on.

And that tends to be what drives, I think, every election cycle.

So I think the most important thing that I always try to keep in mind is to be humble about what we don't yet know.

Because the future hasn't happened yet, and therefore, we can't predict it.

- So we have time, I think I wanna just squeeze in one last quick question, which is that earlier this year, you wrote in one your columns that, "The candidates are painting two pictures of the economy: a resurgent America that's making steady progress toward a future of shared prosperity, this is Biden's message, and Trump's is a dystopian backwater on a path to ruin."

(audience laughing) Which of those economic messages do you think is gonna win out?

- Well, I think that's a pretty fair characterization, if I do say so myself, of how, and I was basing that on, you know, sort of the State of the Union juxtaposed with Trump's Super Tuesday victory speech.

And frankly, again, you know, the mood of the electorate seems to be much more dystopian backwater than morning in America right now.

People are looking out and seeing a future that feels like doom and gloom to them.

And so I think, you know, I'm certainly not saying Trump's going to win.

I think this election is going to be very close and we have no idea how it's gonna turn out.

But in terms of just channeling the economic mood of the majority of Americans right now, I think they're seeing things broadly the way Trump wants them to.

- Right, well Molly, thanks so much for joining us.

- Thank you.

Thanks, everyone.

(audience applauding) (light music)