In the aftermath of the 2024 presidential election, it has become clear that inflation played a pivotal role in shaping voter preferences. Donald Trump was re-elected as President on November 5, 2024, with a significant portion of voters prioritizing economic concerns, particularly inflation, over growth [216d9bc4]. Despite President Joe Biden's assertion that the U.S. economy is 'the envy of the world,' many voters expressed dissatisfaction with rising costs, which they felt overshadowed any economic growth [447d05da].
Recent surveys indicated that nearly 80% of registered voters considered the economy a crucial factor in their voting decisions, with 66% rating the economy as poor [76bc31b5]. This sentiment was echoed by voters like Todd Miller from Oswego, NY, who regretted voting for Biden in 2020 due to ongoing economic concerns [76bc31b5]. The AP VoteCast survey showed that 40% of voters cited the economy and jobs as their most important issues, while 50% identified the future of democracy as a key voting factor [dde71d26]. However, inflation remains a significant issue, with prices rising over 20% since Biden took office, peaking at 9.1% in June 2022, before dropping to 2.4% in September 2024 [447d05da][5193363b].
Gita Gopinath, the IMF's first deputy managing director, emphasized that while the U.S. economy is projected to grow at 3.2% in 2024, down from 3.8%, voters' perceptions are heavily influenced by rising prices, which continue to impact household budgets despite decreasing inflation rates [94ad9233]. Voters like Tiesha Blackwell from Lincoln Park, Michigan, who initially supported Biden, shifted their allegiance to Trump due to the soaring costs of living, highlighting the impact of inflation on voter sentiment [c33c83e5]. In Arizona, a recent exit poll revealed that two-thirds of voters were unhappy with the economy, with 31% identifying it as the most important issue [7ee9cb6a]. Despite a national unemployment rate that has decreased to 4.1% since its peak during the COVID-19 pandemic, many voters still feel the effects of inflation and rising living costs [5cb7c151].
Economist Sal Guatieri noted that while economic data may favor Democrats, voters often blame incumbents for their economic woes, leading to a disconnect between economic indicators and personal feelings [76bc31b5]. This phenomenon has been termed 'vibecession' by analyst Kyla Scanlon, reflecting the gap between favorable economic data and the negative personal experiences of voters [76bc31b5].
As the election neared, concerns about inflation overshadowed other economic indicators. Goldman Sachs recently cut growth forecasts for the UK and eurozone, emphasizing that voters dislike inflation more than they appreciate economic growth [216d9bc4]. The Labour Party in the UK, led by Keir Starmer and Rachel Reeves, has also focused on economic growth, with Reeves admiring Biden's Inflation Reduction Act as a model for addressing inflation [216d9bc4].
High prices have not only affected the U.S. but have also led to political upheaval globally, with leaders in Italy, Argentina, Pakistan, and the U.K. being ousted due to similar economic pressures [5193363b]. Research by Maziar Minovi indicates that incumbents are twice as likely to be removed during inflation spikes, suggesting a broader trend in political accountability linked to economic conditions [5193363b].
Despite Biden's administration passing a $1.9 trillion stimulus in March 2021, which contributed to a 10.7% increase in the U.S. economy compared to pre-pandemic levels, two-thirds of voters rated the economy as 'fair' or 'poor' [37e204d8]. Exit polls indicated that 25% of voters experienced 'severe' hardship due to inflation, underscoring the disconnect between economic recovery and voter satisfaction [37e204d8].
Scott Horsley's analysis highlights that inflation, including a staggering 39% increase in egg prices, led to significant voter dissatisfaction with Democrats. High prices were the top concern for about half of Trump voters, illustrating the personal impact of inflation on voters [31822eb3]. Vice President Kamala Harris and Congressional Democrats faced backlash as 50% of Trump voters cited high prices as their main concern [56b13f51]. Theresa Wolfe, a Trump supporter from St. Petersburg, Florida, expressed shock at rising grocery prices, further emphasizing the personal toll of inflation on voters [bad0407e].
Moreover, Trump voters expressed anger over the economy, with many having valid concerns; inflation peaked at 9% in June 2022, reducing real incomes from $81,210 in 2019 to $77,540 in 2022. Although real income rebounded to $80,610 in 2023, consumer sentiment remains low, with only 41% of Americans feeling their financial situation is good. Approximately 20 million households are severely cost-burdened, spending over half their income on housing [a9e3a437]. Kamala Harris won among families earning less than $30,000 and over $100,000, while Trump won those earning between $30,000 and $99,999, highlighting the economic divide impacting voter behavior [a9e3a437].
In a recent interview, economist Jayati Ghosh discussed the impact of inflation on Kamala Harris's 2024 campaign, noting that Bidenomics failed to resonate with voters. Ghosh criticized the Democrats for mismanaging inflation, linking it to pandemic supply issues and market manipulation, and called for price controls and taxation on excess profits [00e81783]. She also reflected on the U.S.'s moral authority in global conflicts, particularly regarding Palestine, and expressed concerns about Trump's potential to undermine U.S. institutions [00e81783].
As noted by Roshan Kishore in the Hindustan Times, Trump's victory is attributed to high inflation, marking a structural break in advanced capitalist countries. The Wall Street Journal's Nick Timiraos states that fiscal stimulus contributed significantly to inflation, with consumer prices rising 20% during Biden's term compared to 8% in Trump's [8b908916]. Trump's campaign narrative focused on purging the political elite, appealing to a larger constituency [8b908916]. This election cycle has raised questions about the U.S. economy's overheating and the impact of supply-side disruptions, suggesting that economists often overlook extra-economic factors influencing elections [8b908916].
The Financial Times recently reported that in the U.S., prices of regularly purchased goods are now 28% above January 2020 levels, while food, drink, and energy prices in the UK are 30% higher. The Eurozone's 'Frequent Out Of Pocket Purchases' index has risen by 26% since the pandemic [753090a3]. These figures illustrate the broader implications of inflation targeting, which may be misaligned with public concerns as it focuses on 'core' inflation rather than the more pressing headline inflation that affects everyday consumers. Real wages have not kept pace with these elevated prices, and since the 1980s, productivity gains have favored companies over labor, suggesting that inflation targeting has not boosted productivity as intended [753090a3].
In a recent analysis, Thomas Ferguson highlighted the bafflement among Democratic officials regarding the 2024 election results, noting that 64% of voters felt the campaign lacked focus on important policy debates. Ferguson's 'investment theory of politics' suggests that electoral outcomes are shaped more by donor preferences than by voter concerns, a sentiment echoed by the significant drop in voter turnout, with 2.6 million fewer voters participating compared to 2020 [12adc3d6]. He critiqued Biden's handling of inflation and economic policy, emphasizing the role of supply-side issues and the Democratic Party's failure to address key voter concerns, which contributed to their electoral losses [12adc3d6].
Ferguson also pointed out the growing polarization of business interests and the influence of big donors on the political landscape, suggesting that the lack of realignment in American politics has further complicated the electoral dynamics [12adc3d6]. As the political landscape continues to evolve, the impact of inflation on voter preferences remains a critical factor to consider. With Trump leading in economic approach support at 46% compared to Harris's 38%, the stakes are high for both candidates as they navigate the complex relationship between inflation, economic growth, and voter sentiment [c33c83e5]. Treasury Secretary Janet Yellen has advocated for bold economic measures to address these challenges, emphasizing the need for stability over rapid recovery with high prices [5193363b].
The discourse surrounding inflation has intensified since 2021, with economists like Larry Summers warning of inflation risks while others, including Paul Krugman, shifted their stance on the impact of the American Rescue Plan on inflation [b862ae63]. The 2024 election highlighted how inflation was a top concern for voters, paralleling historical trends where inflation impacts purchasing power broadly, while unemployment's effects are more concentrated. This has led to calls within the Democratic Party to reevaluate their macroeconomic strategies, balancing the pursuit of full employment with effective inflation control [b862ae63].
In a broader context, Janan Ganesh of the Financial Times argues that economic factors alone cannot account for voter anger, as seen in Sinn Féin's rise from 1-2% in the 1980s to 19% in the latest election despite Ireland's economic growth. Ganesh suggests that while economic growth is important, it does not necessarily lead to healthier politics, challenging the notion that improved economic conditions guarantee political stability. This perspective emphasizes the need for a more nuanced understanding of voter sentiment that goes beyond economic determinism [107cee32].