The morning after the presidential election, Rachel Dürrenfreund has a simple explanation for why Trump won the election: “It’s the economy, stupid,” says the transatlantic researcher from the German Council on Foreign Relations. The phrase actually comes from the campaign strategist James Carville, who helped Bill Clinton win the election in 1992.
And she refers to a second slogan that the Republican used to promote himself in the seven electoral swing states in the days before the election: “Trump will fix it.”
The fact that Thousandfriend is now declaring Trump’s victory with these slogans might come as a surprise at first: Americans should actually have no reason to complain if you look at the macroeconomic data: the gross domestic product grew by 2.8 percent in real terms in the third quarter alone, as did the unemployment rate is low at four percent, the inflation rate has fallen again to 2.3 percent.
And yet, for voters, concerns about the economy were the most important issue for the upcoming election, ahead of the future of democracy and immigration. Especially in the swing states that will decide the election. In Wisconsin, for example, more than one in two voters said their family’s financial situation was worse than it was four years ago. In 2020, when Biden won, only one in five voters in this swing state meant that, according to a post-election survey by Edison Research.
Polls had also shown that a majority of voters believed Donald Trump would be more likely to solve the country’s economic problems than incumbent Vice President Kamala Harris. 42 percent of those surveyed said they would more likely to benefit financially, If the now seventy-eight-year-old former president wins the upcoming presidential election, 24 percent will only believe that about the vice president, who is 18 years his junior (the rest think nothing will change anyway).
How does this perception fit with the economic situation? This can certainly not be explained simply by the fact that voters are increasingly judging reality in a way that suits their party political orientation – i.e. Republicans view the Democrats’ current policies negatively. Voters also base their views on past developments. And: The economic situation is not as good everywhere in the United States as the general data suggests.
unemployment
One of the swing states will be the state of Nevada; in past elections, only a few tens of thousands of votes have often determined who wins the state’s six electors. However, this state currently has the highest unemployment rate. The tourism industry in and around Las Vegas in particular has still not been able to recover from the Corona shock, with more than one in eight people there temporarily out of work. In Michigan, which has long been an industrial country, unemployment is higher than the national average. The car manufacturer Stellantis (Chrysler, Dodge) based there recently announced that it would cut 2,400 jobs. Things are looking somewhat better in the five other swing states, where the unemployment rate has returned to around the pre-Corona level.
Inflation
The inflation rate has fallen back to normal levels in the past few months. But many voters have not forgotten the price surge, which peaked in the summer of 2022 at 9.1 percent year-on-year. The Fed recently lowered interest rates again. But the price level is still well above what citizens had to pay at the supermarket checkout under Trump as president.
In addition, all swing states have a median household income below the national average of $77,719 per year (gross). Because of high inflation, nominal household income has increased over the past five years, but in real terms it has stagnated since 2019. It was only last year that it was able to increase in real terms.
House prices
An ever larger part of the income has to be used to finance one’s own apartment. While the financing interest rates under Trump were still moderate between 1.75 and 2.25 percent, the Fed raised the key interest rate to up to five percent to combat inflation – and thus significantly increased the financing costs for home buyers alone. House prices themselves also rose sharply. In the swing states of Arizona, Georgia and North Carolina in particular, they rose more than in the rest of the country: by more than 70 percent within five years.
The reasons are different: the sunny states have become more attractive for families since the Corona crisis and the home office trend, urbanization is increasing the pressure on the cities there, and at the same time house construction came to a standstill after the real estate crisis in 2008 and during the Corona crisis. Arizona’s capital Phoenix, for example, has been at the top of the list of places with the highest price increases for houses for years. The result: Own property and, indirectly, rents are becoming more difficult to afford for a larger number of Americans in the swing states.
Voters don’t forget
Of course, the price surges are not Biden’s sole responsibility. Disrupted supply chains after the Corona crisis contributed to inflation, as did the energy price crisis following the Russian attack on Ukraine in spring 2022.
Unemployment, inflation and stagnating wages were particularly noticeable when the President was Joe Biden and his Vice President Kamala Harris, while many associate Trump’s presidency with an economic and financial upswing – despite the Corona crisis at its end. They did help under Biden increased government spendingto combat the consequences of Corona. But they also contributed significantly to inflation.
Voters have not quickly forgotten the economic turbulence of the past few years. Three-quarters of Americans describe affordable housing as a significant problem. According to a CNBC survey, three quarters believe that prices will continue to rise sharply. According to the University of Michigan’s Consumer Sentiment Index, consumer confidence increased significantly in October. But this is partly because of Republicans who are increasingly confident that their candidate will win the elections.
