Of the many possible explanations for former US President Donald Trump’s stunning return to the White House, one towers above all others: the cost of living.
In exit polls, 45 percent of voters said they were worse off than four years ago, when President Joe Biden took office, versus just 24 percent who said their financial situation had improved.
Voters who named inflation as their number one concern broke for Trump over Vice President Kamala Harris by a factor of nearly two to one, according to an Associated Press VoteCast survey of more than 120,000 voters nationwide.
At first glance, the official statistics do not appear to support such a dour economic mood in the US.
Inflation currently stands at 2.4 percent, well below the historical average and not far off the US Federal Reserve’s target of about 2 percent.
That’s down from a peak of 9.1 percent in June 2022 amid the fallout from the COVID-19 pandemic.
At the same time, wages have been growing faster than prices since at least the middle of 2023.
So if inflation has been brought under control under Biden and Harris, why did Americans reject their administration so decisively at the ballot box?
The likely answer lies in the lag between the present rosy economic conditions and the impact on people’s wallets.
Although measuring whether people are better or worse off is difficult due to differing individual circumstances and the myriad ways to parse the data, there is evidence that Americans have less spending power compared to when the Biden-Harris administration took office.
An analysis of government statistics by Bankrate, a New York-based consumer financial services company, shows that although wages increased by 17.4 percent between January 2021 and June 2024, prices rose 20 percent over the same period.
Even with wage growth outpacing inflation, Bankrate forecasts that the gap that opened between inflation and earnings will not fully close until the second quarter of 2025.
Simply put, American consumers remember their money going further before Biden and Harris entered the White House, even if the Democrats could point to healthy economic growth and low unemployment figures that would be the envy of most developed countries.
In election exit polls, no less than three-quarters of voters said that inflation had been a cause of severe or moderate hardship during the past year.
By contrast, Americans recall the majority of Trump’s first term being a period of low inflation and rising wages.
In a CBS News poll published in March, 65 percent of respondents said the economy under Trump was good, nearly double the number who felt the same way about the Biden administration’s economy at the time.
Warnings by economists, in advance of the election, that Trump’s plans for sweeping tariffs on imports would almost certainly lead to higher inflation did little to sway voters.
Ultimately, Harris could not escape the shadow of Biden’s presidency, and voters, instead, delivered Trump a resounding victory in both the Electoral College and the popular vote.
