Welcome to FiveThirtyEight’s politics chat. The transcript below has been lightly edited.

nrakich (Nathaniel Rakich, senior elections analyst): For a long time, the economy has been seen as a big liability for President Biden in his reelection bid. Inflation soared in 2021 and 2022, culminating at a rate of 9.1 percent last June. The same month, average gas prices exceeded $5 per gallon. And in the second quarter of 2022, the gross domestic product actually decreased by 0.6 percent. It was little surprise, then, that only 28 percent of Americans approved of the way Biden was handling the economy in a July 2022 Quinnipiac University poll.

But in recent months, economic indicators have been looking up, and Biden has begun making the case that his economic policies are working. Yet Americans don’t seem to be changing their perceptions of his stewardship of the economy. (The last Quinnipiac poll put his approval rating on the economy at 36 percent.) So for today’s FiveThirtyEight Slack chat, I want to explore why that is, and whether Biden has any hope of actually making the economy a winning issue for him in next year’s election.

First, though, let’s set the scene: What are indicators saying right now about the health of the economy?  

ameliatd (Amelia Thomson-DeVeaux, senior reporter): For an economy that’s allegedly been on the brink of a recession for over a year now, it’s looking pretty good! Real wages are finally rising faster than inflation, the labor market is weakening a bit but is still fairly strong for workers and consumers are still spending at a healthy rate.

Monica Potts (Monica Potts, senior politics reporter): What Amelia said. For starters, the job market remains really strong. Unemployment is at 3.8 percent, and wages are rising. Inflation, at just over 3 percent, is finally cooling, too. The Federal Reserve seems to be succeeding in its high-wire act of lowering inflation without causing too much unemployment.

There are other signs, too. For example, the Inflation Reduction Act has spurred investment in manufacturing, which the White House has been more than happy to point to.

ameliatd: In a lot of ways, it looks like the economy is finally returning to its pre-pandemic normal — but with conditions that are a bit more worker-friendly. That mythical “soft landing” is actually looking like it could come to pass.

Of course, economists’ recession predictions are never very reliable. (This is a time-honored FiveThirtyEight refrain.) And things can always shift — for example, as Monica wrote recently, student loan repayment is about to restart, which will mean millions of Americans have less money to spend as they resume their monthly payments. But it’s still a rosier situation than a lot of people were predicting even just a few months ago.

gelliottmorris (G. Elliott Morris, editorial director of data analytics): That’s right. Some of the doomer predictions of a recession were never really reliable, but aggregate economic expectations are still up relative to what people were saying a year or even six months ago. That said, there are some not-so-hot indicators. Mortgage and interest rates are continuing to climb, for example, and the personal savings rate is nearly at an all-time low. That’s a different dimension of “the economy” than, say, annual growth in wages, but it’s an important one.

ameliatd: Right, Elliott, and it’s not clear that the Fed is done with rate hikes. A lot will depend on what the August 2023 inflation data looks like when it comes out later this week.

Monica Potts: Yes, I think that hints at a really big and persistent problem with asking voters how they feel about “the economy.” What that term means to people can vary a great deal. Does it mean how much money they’re making, or how much they spend on things like housing and food? Does it mean whether they can afford daycare? There is a huge variation in how people feel about the economy — and many different ways the federal government can have an effect on those things.

ameliatd: Another question is whether consumer spending will start to tick down — which has been a possibility as people spend down their pandemic savings. But generally, there are other signs that Americans are feeling OK about their finances. For example, a recent Ipsos poll found that the share of Americans who say they have enough money to cover an unplanned expense (54 percent) is higher than at this time last year (40 percent). Fewer people are also saying that after they pay their bills, they don’t have enough money to spend on things they want.

nrakich: And yet, despite this, Biden is having trouble convincing voters that “Bidenomics” is working. Why?

Monica Potts: To start at the beginning, Biden inherited a really weird economy. The COVID-19 shutdowns caused a severe and dramatic recession, but then the economy started to bounce back. But people’s behavior had also changed. More people were working from home and moving, they had cash to spend and supply chains were slow to restart. So Americans were generally sour on the economy from the time he took office.

The recovery was afflicted by super-high inflation, as you noted at the beginning, Nathaniel, and a lot of what the Biden administration has done on economic policy is the kind of slow-moving, behind-the-scenes policymaking that voters don’t really notice. Even though inflation is cooling, prices are still much higher than they were before the pandemic; borrowers are still seeing much higher interest rates; etc. So I think a lot of it is that Americans are generally unhappy with the new normal we find ourselves in.

gelliottmorris: I think that last point is a really good one, Monica. The share of people telling pollsters that the broader economic situation is poor is still around the highest it’s been since 2018. At first, that seems hard to square with the rosy economic indicators we talked about. But I think it’s possible that people just have longer-term memories about economic growth and remember a time when prices were meaningfully lower.

Lots of the discussion on this topic is pegged to tracking annual change in the consumer price index or job market or what have you. But if you take a longer view, for a lot of families, things are just permanently more expensive now. Even if their wages are up, I doubt they enjoy spending 15 percent more at the grocery store than they were before the pandemic. And it will take a while for those memories to fade.

Of course, that’s just my theory.

ameliatd: I mean, some people think the economy is improving. Civiqs’s tracking poll shows that Democrats, in particular, are more likely to say that the current condition of the economy is fairly or very good (63 percent) than they were a year ago (53 percent). But that’s not quite the question you’re asking, Nathaniel — it’s not just whether people think the economy is getting better, it’s whether people are seeing an improvement and saying, “Yeah, Biden is making that happen!” And there, it doesn’t seem like Biden is getting much of a boost. According to a recent Wall Street Journal poll, for example, the share of registered voters who say they approve of the way Biden is handling the economy hasn’t meaningfully changed since April.

Which gets to my theory about what’s happening. I’m not sure voters were ever going to give Biden credit for an improving economy, especially because the inflation increase happened under his watch. It’s not like he can come in and say, “Look at this mess my predecessor left for me.” 

But! That doesn’t mean this turn of events isn’t good for him, because the alternative — a souring economy — could really hurt him.

nrakich: Interesting, Amelia. So you think that the stink of the bad economy of a year or two ago is permanent for Biden? He can never wash it off, even if he fixes it?

ameliatd: I don’t know about permanent, but as Elliott said, prices are still higher. Americans are increasingly convinced that those high prices are here to stay. So the fact that people are starting to get used to those higher prices and are saying the economy is improving could be an indication that Biden’s dodging a bullet. So it depends on how you frame it. On the one hand, people aren’t giving Biden credit, so that’s unfortunate for him. But on the other, it’s looking increasingly like we might have a normal-ish economy heading into 2024, which you could see as a huge win considering how much economic volatility we’ve seen since the pandemic started.

Monica Potts: I don’t think prices will go down, but it’s also possible people will just get used to them. So they could hurt Biden less, as Amelia said. And that leaves room for other issues voters care about to rise in importance.

nrakich: Question, though: How much does getting that win really matter politically? Historically, what has been the correlation between the health of the economy and presidential reelection chances?

ameliatd: Would Biden love for “Bidenomics” to show up in high school history textbooks? Sure. But what he really wants is to win reelection, and that is much less likely to happen if people think the economy is getting worse.

gelliottmorris: Historically, we know that actual economic conditions are pretty well correlated with presidential election outcomes. If the state of the economy is broadly positive compared with a year or two ago, then the incumbent party tends to get a boost. Of course, economic indicators do not fully predict outcomes of elections, but they do have a residual impact.

The good news for Biden on this front is twofold: First, voters tend to start making these retrospective evaluations closer to the election. And second, that they look only a couple years in the past. That means there is time for things to get even better for him, and for him to be rewarded.

The bad news for Biden, though, is that there’s still time for things to turn against him!