'It's the economy, stupid!'

"The economy, stupid" is a phrase that was coined by James Carville in 1992. It is often quoted from a televised quip by Carville as "It’s the economy, stupid." Carville was a strategist in Bill Clinton's successful 1992 U.S. presidential election against incumbent George H. W. Bush. His phrase was directed at the campaign's workers and intended as one of three messages for them to focus on.

If Trump’s supporters were to varying extents persuaded by the narrative of the Republican right that Trump’s victory is a revolt against the insidious encroachment of forces antithetical to the liberties and sensibilities of the common sense folk of middle America. There was another narrative that Kamala and the Democrats could not overcome, ‘it’s the economy stupid’. If, in the end, all elections were about the economy, Reagan’s question ‘Are you better off than you were four years ago ?’ hung around Kamala's neck and meant she was sunk from the start.

However, every objective economist described the economy, in the last years of the Biden administration, as strong and in fact in robust good health. At 4.1% the American unemployment rate was low by international and recent comparisons. GDP was growing at a healthy 2.8% in the last last quarter of 2024 according to the Bureau of Economic Analysis which was the same as during the Trump administration. Consumer spending, which accounts for more than two-thirds of America’s economy, was surging, rising 3.7% in the last quarter of 2024, which was the highest rate of growth since the first quarter of 2023, according to the BEA and wages were growing faster than prices.

The long-term trends of globalisation, industrial decline, export of jobs, and the faltering progress of generational living standards, which Trump had painted so vividly in his campaign of 2016 were joined by something much more immediate and recognisable, inflation. Inflation in the United States reached 9% in 2022, the highest rate of inflation that the US had experienced in over 40 years. A survey by The Associated Press found high prices were the number one concern for about half of all Trump voters. A study by Maziar Minovi, who heads the Eurasia Group, of elections over several decades found that whenever there's a sustained period of high inflation, voters are twice as likely to lose faith in the people running the government. This applies in most democracies, when there is an inflationary shock across the world, the risk of the incumbents getting kicked out increases.[83] According to exit polls from CBS News, 75% of voters reported that inflation had caused moderate or severe hardship for them over the past year, with 45% saying they were worse off now than they were four years ago. During his campaign, Trump vowed again and again to end inflation and strengthen the economy.[84]

In a recent study, the Bookings Institution found that while the economy was a consistent concern for voters in election over the past decades, recently the impact of the 2008 recession and the COVID pandemic had been followed by a significant disconnect between economic metrics and public perception.

Historically, consumer attitudes regarding the economy have closely tracked prominent macroeconomic indicators like GDP, unemployment, equity prices, and inflation. But since the pandemic, this relationship has fundamentally changed. By most measures, consumer attitudes about the economy have been divorced from the underlying economic conditions, with consumers feeling as poorly about the economy as they did in the immediate aftermath of the Great Recession.

www.brookings.edu/articles/the-paradox-between-the-macroeconomy-and-household-sentiment/

This gap between perception and reality may be linked to the polarising effects of media consumption or ideological divergence which enhances the subjective analysis of all economic data. A CNN survey indicated that Republicans are three times more likely to think the economy is good when a Republican is in office than Democrats when a Democrat holds the White House. What just happened? It was the economy, stupid

The narrative of American decline and lost greatness has also become deeply embedded. This is which could be seen as “nostalgianomics” since disposable incomes has increased since the 1960s and working hours have decreased and technology has made life easier, so why do millions of people view the mid-20th century as a golden age?

The answer may be because of the uneven distribution of wealth, labour insecurity, and the harsh logic of neo-liberalism.

The sense of things ending which historian Steve Fraser called “the end of the future,” and described as a loss of faith in progress. This pessimism rests on changes that are real and visible. They are the subject of news articles, YouTube documantaries and in plain sight acress the small towns and urban landscapes of America.

. Life expectancy is decreasing and more people are finding themselves sleeping in parks, on subway trains, or sidewalks as a result of the rising cost of property, drug addiction and family breakups. Entire towns and small cities have withered away as the industries that supported them have vanished. The nation’s roads, bridges, tunnels, and power systems are badly deteriorated.

Fear of the limousine liberal has stoked right-wing populism for nearly a century. Today it fuses together disparate elements of the conservative movement. Sunbelt entrepreneurs are on the rise, blue-collar ethnics and middle classes in decline, and heartland evangelicals, and billionaire business dynasts have found common causes, despite their real differences, in shared opposition to liberal elites.

'The United States has long since become a developed country undergoing underdevelopment'

While the grim narrative of American decline may provide a useful source of grievance for Trump, it may also be that for many Americans the simple observation that inflation was lower during the Trump years meant that “His track record proved to be, on balance, positive, and people look back now and think: ‘Oh, OK. Let’s try that again,’ said Douglas Holtz-Eakin, a former White House economic adviser, director of the Congressional Budget Office, and now president of the conservative American Action Forum think tank.[85] This easily identifiable comparison was a truth Kamala could not escape no matter how many economists pointed out that by almost every macroeconomic measure the economy had fared better under Biden than Trump. Research by Harvard University economist Stefanie Stantcheva shows that people blame inflation for making things more expensive, but they think that they deserve all the credit when they get new jobs or pay increases.[86] In other words, inflation is seen as a unique kind of betrayal by the government and one that is prodded back into the forefront of people’s minds every time they visit a supermarket. This visceral reality also obscured regular analysis by economists who pointed out that many of Trump’s plans would likely add to inflation An immigration ban would push up labour costs, tariffs on imports would act as an additional tax on products on the stores, and tax cuts would put more money in the economy the result would be higher inflation and higher interest rates. But that’s all in the future, here and now are the price of groceries.