Sunny Side Up

A project that started in curiosity, for the past 1,776 days and weeks, I have recorded data points on daily gas prices at the Big Smoke gas station at 233 W. Franklin Road in Meridian, and the daily approval rating of U.S. Presidents Trump and Biden from either RealClearPolitics or FiveThirtyEight polling aggregators.

In 2022, we have an instance of a seemingly concrete beginning and ending masking a lot of negative drama in the middle. On New Year's Day, President Biden's approval rating from FiveThirtyEight's polling aggregator was 43.3. On New Year's Eve, today, his approval is 43.3. Of course, this is a misleading conclusion about a totally static approval rating, the depths of which were reached in latter July, 37.5 on July 21st, a little after gas prices reached their zenith, $5.29 on June 29th. This suggests a bit of causal action, with gas prices a leading indicator of Biden's approval travails.

What turned things around? Gas prices backed off quite a bit from their high, and rather quickly, 34 cents lower on July 29th than on June 29th. And Biden's approval inched higher once a key event occurred: Senator Joe Manchin and Senator Chuck Schumer struck a deal on the Inflation Reduction Act, marking its eventual signing into law on August 17th. By then, Biden's approval had inched upwards to 40.4, with that three point jump being a rather strong move for a relatively static indicator all year long (standard deviation of 1.29). The legislative dam for this signature, $770 billion, bill had been broken, and Congress could legislate spending items that Democrats argued would affect all Americans positively, while Republicans argued the opposite.

This latter half of the year was an electoral bet by both parties that either inflation and big spending would get the thumbs-down from the electorate (the Republican bet, of course), or a productive Congress (one of the most productive in generations, on razor-thin majorities in the House and Senate) would be seen favorably (the Democratic bet). In the end, inflation backed off enough from its summer high to reduce the potency of the spending issued for the Republicans, and combined with two non-economic features of the political landscape (the overturning of Roe v. Wade and novice Republican candidates for key Senate races), the Democrats made some historic gains in the midterm elections (all Democratic incumbents winning their re-election races, and the president's party gaining gubernatorial mansions for the first time in a midterm election since 1934).

This latter half does overshadow the alarm of the first half of the year, when inflation spiked to 9.1 percent in June and the war in Ukraine added a jolt to global energy markets, all contributing to massive prices at the pump: from $3.49 on February 20th just prior to the Russian invasion on February 24th to $5.15 on June 24th, a 48% increase. There was little cause for optimism in these figures for President Biden. But the Pearson Correlation of Biden approval and gas prices for the entire year was pretty consistent throughout, and ended at -.69, a very strongly negative relationship. If prices backed off at the pump, Biden's approval rose, and vice versa.

Will this pattern continue in 2023? It is very hard to say. On the one hand, the Pearson Correlation for Trump's final two years in office was very slight: .14 in 2019 and -.18 in 2020. Yet the correlation has been very strong for Biden the past two years: -.69 in 2021 and -.69 in 2022. Given 707 data points for Biden, I will bet on big data. Biden and the gas pump appear to go together.