George H. W. Bush Senior, going into his bid for a second term, was frequently told that it’s all about the economy stupid! The U.S. economy went into a recession in 1990; the unemployment rate rose from 5.9% in 1989 to a high of 7.8% in mid-1991; and the debt percentage of total gross domestic product (GDP) rose from 39.4% in 1989 to almost 46.8% in 1992. By the presidential election in1992, many conservative Republicans’ support of Bush had waned for a variety of reasons, including raising taxes and cutting defense spending. Americans were less concerned with his foreign policy successes (e.g. Persian Gulf War victory over Iraq) than with the nation’s deteriorating economic situation. Thus, despite having once been a relatively popular president, he lost to Bill Clinton.
Today, the primary issue among voters continues to be the economy, and especially the high rate of inflation and high interest rates affecting people’s mortgages and the cost of loans in general. Yes, there is low unemployment and more people are employed today than anytime since the pandemic. However, unfortunately for Joe Biden, the average American is struggling on a daily basis to make ends meet, especially since average wages have not kept up with increasing inflation over the last few years. Many people and businesses are still recovering from the pandemic, which has created a real sense of insecurity and a general malaise within the population.
Taking all of this into account, and that people are not happen with another Trump vs. Biden election, there is a general mistrust with governance. The same can be said for in Canada where you have a Prime Minister, Justin Trudeau, and a party that has been in power for over nine years. The opposition is continuously harpooning about the high cost of inflation and high interest rates that average Canadians are facing. There is also a good amount of discord over the government’s intention to raise the national carbon tax this coming April, despite it being only one element of several policies aimed at tackling climate change. However, right now, climate change has taken a back seat to the economy. A federal election will very likely be called next year in Canada, and all the government can hope for is that the economy will improve and inflation will come down.
Overall, these are tough times for governing parties. There appear to be no win-win situations. Government deficits have been climbing steadily, partly in earlier response to the pandemic, with no end in sight. Wars overseas in the Ukraine and Middle East are not helping. Funds are being allocated to support the Ukraine against Russia, Israel’s military and the plight of Palestinian refugees in Gaza. The situation has placed both the U.S. and Canada in a difficult situation given the evolving humanitarian crisis in both conflicts. In terms of foreign policy, domestically it is a no-win and highly emotive situation for both governments in terms of supporting one side or the other particularly in the Israeli-Palestinian conflict.
In addition, stability in the energy markets is constantly under threat as a result of the sanctions against Russian oil and natural gas exports and the general unstable situation in the Middle East. As a result, there has been a measurable direct or indirect impact in the form of rising costs for gas and heating fuel in North America.
There is little doubt that we live uncertain times. There is also little doubt that voters are concerned with the cost of living and continuing hard economic times. This bleak outlook does not bode well for President Biden and Prime Minister Trudeau. The question then becomes whether their political opponents can take advantage of the situation? I guess time will tell.
FROLITICKS 