If President Joe Biden steps down as this year’s Democratic presidential candidate, he’ll be handing an economic gift to his successor.
The Biden economy has been terrific, except for the one thing everybody knows about: inflation. Many Americans blame Biden for inflation, especially his Republican critics, who call it “Bidenflation.”
That’s unfair, given that inflation, which peaked at 9% in 2022, was mostly caused by COVID-related distortions and tight energy markets. Biden fueled the flames a bit by signing a $2 trillion stimulus bill in 2021. But his predecessor, Donald Trump, signed $4 trillion of stimulus into law before him. It was the whole gusher of stimulus that contributed to inflation, not just Biden’s share.
Inflation is nearly back to normal levels, and a Biden replacement would have a lot less explaining to do about the high cost of food, gas, and rent. Biden’s departure might even turn the economy into a net winner for Democrats.
Read more: Inflation fever breaking? Price hikes on everyday expenses finally ease up.
The pressure on 81-year-old Biden to withdraw seems to be intensifying rather than easing as the damage from his debate performance on June 27 becomes clear. Polls show Biden losing ground to his Republican opponent, Trump, with three-quarters of voters now saying Biden is too old for the job. Some wealthy Democratic donors are urging Biden to pull out. His campaign stops are focused on damage control and demonstrating his vigor rather than taking down the nearly-as-old Trump.
In a June 5 interview with ABC News, Biden said he merely had a "bad night" during the debate, mainly because of a bad cold. He insisted he has the stamina and acuity for another four years in the White House. But the pressure to withdraw, if anything, is growing, and some Biden critics say the president is in denial about his weak public standing and the worsening odds of beating Trump.
The hot political parlor game all of a sudden is conjuring a dream ticket of Democrats who might replace Biden. But Vice President Kamala Harris is the frontrunner by miles, given that she’s just one step away from the job already. Her name is part of the Biden-Harris campaign, and she’s better known nationally than any other plausible replacement.
Would voters associate Harris with inflation the same way they associate it with Biden? Maybe not. The vice presidency is a famously hollow job that brings national fame but few responsibilities. “I am nothing,” said John Adams, the first vice president. “But I may be everything.”
For Harris, being Biden’s understudy could mean a fresh start to define herself and convince voters that a new face means the inflation era is over.
The numbers say it already is over. Inflation is now running at a manageable 3.3%, while incomes are rising by 3.9%, allowing workers to get ahead. The only real inflation left is in rent and insurance. Rent inflation is likely to improve because new leases are coming down from 2022 peaks, on average. Car and home insurance inflation is an outlier, with premiums rising because insurers are slowly catching up with cost increases from the last several years. Those should level out as well, eventually.
Irritated shoppers correctly point out that many prices have gone up and stayed up, even if the current rate of increase is small. But Harris can hint to voters, "Not my fault. It was the other guy." She’d have to get the messaging right, but change at the top — out with the old, in with the new — would be a chance for Democrats to reset their shaky reputation on inflation.
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The rest of the economy is approaching Goldilocks status. The latest job numbers reflect a healthy economy chugging along, with employers creating a solid 206,000 jobs in June. Income growth is moderate — not too hot, not too cold — which has revived hopes of Federal Reserve interest rate cuts by the fall. Other data suggests inflation is finally under control, with investors now waiting for the July 11 consumer price numbers to confirm the trend.
When the Fed does start cutting rates, it will be in very small increments that won’t bring an immediate windfall to borrowers. But it will signal that rates have peaked and are headed lower, making potential home and car buyers a bit more optimistic.
Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards
The stock market, meanwhile, is already at record levels, and Fed rate cutting could be a tailwind pushing stocks even higher. These would normally be extremely bullish signals for the incumbent party holding onto the White House.
Aside from his age, Biden has two glaring weaknesses with voters: the economy and immigration. Biden gets low marks on the economy largely because of inflation, and that is mostly in the past. If Biden is in the past as well, his replacement could get credit for what’s going right without the blame for what went wrong. A bit more confidence in Democrats on the economy could offset some of the party’s weakness on immigration.
If Kamala Harris is, in fact, the next Democratic nominee for president, she would still need to prove herself to voters, who are likely to recall she ran a lackluster and disorganized presidential campaign against Biden and other Democrats in 2020. But she might start with a bit of momentum thanks to the Biden economy she'd inherit.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.
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