D The red shift in 2024 was so extensive No local issue appeared to tip the election in President-elect Donald Trump’s favor. However, a key factor may be widespread voter dissatisfaction with the economy.
Persistent pessimism about the US economy has baffled political analysts, most of all The leading indicators indicate that it is strong And the United States recovered Better than other countries From an epidemic-induced recession. There is inflation come down significantly From its peak in June 2022, the rise in basic commodity prices has slowed. The Federal Reserve began lowering interest rates, making debt cheaper. There is economy Continued growth at a solid rate. unemployment fell to the lowest level in 54 years in 2023 and remains within a desirable range.
On paper, everything looked great. But in the poll after the poll Before the election, voters indicated concern for the economy and ranked inflation as their top issue. D Roughly, primary polling data available Exit polling showed the same trend.
At the heart of this disconnect may be factors that broad economic indicators often struggle to capture: Despite a “strong economy,” many Americans continue to feel the burden of higher prices, struggle to find work and take on more debt. And Election Day results suggest they blame Democrats — particularly President Joe Biden and Democratic nominee Vice President Kamala Harris — for the problem.
Here the rosy portraits of economics embraced by Democrats can be missed.
There was a real inflationary response
Although inflation is now down from a post-pandemic high of 9.1 percent to 2.4 percent, it has been clear for months that Americans are still hurting financially and emotionally.
Wages have increased Catching up with inflation On average, however, wage gains have not been uniform: The lowest-paid workers have seen some big gains, particularly in the leisure and hospitality sectors, but other industries, from advertising to chemical manufacturing, have seen their wages decline relative to inflation.
But even if workers receive an increase in inflation, that doesn’t help sticker shock. Research has shown consumers have a Internal “reference price” — An idea of what constitutes fair value for products they regularly purchase. If that imagined price doesn’t match reality, customers feel short-changed.
Although an individual’s reference value may change, it usually gradually follows the normal pace of inflation (about 2 percent per year). Consumers haven’t had much time to adjust to the rapid inflation in recent years. This causes them to overestimate inflation: an August YouGov survey found this to be the highest Consumers feel inflation is significantly higher Compared to it actually.
Consumers often are too Misunderstanding how inflation works. The important thing to know is that it only goes one way: when inflation falls, it means that prices are rising less quickly, not that they are falling. (This can happen, though rarely.)
Falling prices, a phenomenon known as deflation, would be a potentially worrisome signal about the health of the economy. If consumers pay less for a good, that can translate into less money to pay production and distribution workers, leading to lower overall consumer spending and slower economic growth.
The job market is tougher
The days of pandemic-era “great layoffs” — when employers were struggling to recruit and workers had their choice of jobs and the power to demand higher wages — are well and truly over. The unemployment rate has risen in recent months 4.1 percentAnd there’s job growth Slowed to levels not seen since 2020.
This is still within what economists would consider low unemployment. But top-line rates don’t tell the whole story.
For one, people are Being unemployed for a long time: 1.6 million Americans were unemployed for at least 27 weeks in October, compared to just 1.3 million in the same month last year.
Many workers may find themselves unemployed, in part-time work or stuck in jobs that do not require their training or qualifications. This is especially true for recent college graduates, more than half of whom were unemployed a year after graduation, according to one February report By the Burning Glass Institute and the Strada Institute for the Future of Work.
There are also some industries cut work. This includes jobs in manufacturing and temporary support services, which fell by 577,000 from March 2022.
The overall unemployment rate doesn’t really reflect these nuances, suggesting that Americans’ careers may not be as rosy as the top-line numbers make them appear.
Americans have less money and are taking on more debt
After a brief spike in savings rates during the pandemic due to successive stimulus checks, Americans are saving less now Compared to what they were pre-pandemic. This creates a cycle where Americans have less money, so they borrow more. Because interest rates have gone up, borrowing has become more expensive, they have less money.
Americans are drawing from their now-shrinking savings and piling up debt on credit cards and other revolving credit plans where consumers can repeatedly borrow money up to a certain limit and pay it off in installments. The total amount of credit card debt in the United States has reached one An all-time high of $1.14 trillion As of October, individuals owed an average of $8,000.
There are credit card delinquency rates is up. Especially young adults, many of whom are struggling with high student loan debt, are Falling behind on credit card payments. At some point something has to give.
That may be part of the reason many Americans still yearn for the economy under Trump in 2019, when they had more cash on hand and weren’t looking at so much debt.
