Fifty-five percent of Americans said “their financial situation is getting worse,” according to a Gallup poll released this week. That’s a record for the 25-year-old survey. Americans are similarly pessimistic in other measures of economic sentiment — the Michigan consumer sentiment index, for instance, is near record lows — lower than during the Great Recession.
That dissatisfaction is evident in President Donald Trump’s poll ratings as well: A recent Fox News survey put Trump’s approval on the economy at just 34%, and other polls are similarly brutal. But it was not inevitable that voters would turn their discontent about the economy on the president. For that, Trump has only himself to blame.
To be clear, many Americans were already struggling despite low unemployment and inflation before and after the pandemic.
For decades, when large numbers of Americans expressed negative feelings about the economy, they were generally reacting to high unemployment, high year-over-year inflation or both. But even as inflation decreased in the latter half of former President Joe Biden’s term, the issue played a central role in Trump’s return to the White House. Since Biden, though, Americans’ views of the economy have been much more negative than typically associated with inflation around 3% and unemployment below 5%.
To be clear, many Americans were already struggling despite low unemployment and inflation before and after the pandemic. Frustration over a two-tiered economy was widespread years before Covid-19, powering the Occupy movement in 2011 and, later, Sen. Bernie Sanders’ first presidential campaign. As economist Mike Konczal noted, prices for essentials, such as food, electricity and motor vehicle insurance, have risen faster than inflation overall — a burden felt more heavily by households with lower incomes. And home prices have spiked while mortgage rates are at their highest in 15 years.
But where past economic discontent was easily explained by measures of unemployment or inflation, clearly something else has been driving the anger in the past few years. A March paper from Jared Bernstein, former chair of the Council of Economic Advisers, and Stanford’s Daniel Posthumus, found that “using four-year inflation rather than the more often used annual measure” better predicts consumer sentiment, including recent pessimism. The pandemic-era inflation spike has lingered in voters’ minds because, even as the rate of inflation has come down, prices remain higher than they are “supposed” to be — i.e., what they roughly would have been if the pandemic inflation had never happened. (Polling expert G. Elliott Morris reached a similar conclusion.)
If milk prices jump by 100% one year and 3% the next, you will not forget in the second year that milk used to cost half as much. It also explains why voters would react so negatively to inflation that is not high by historical standards. As economist Paul Krugman is fond of pointing out, prices rose by almost the same amount during Ronald Reagan’s first term as they did under Biden. Because Reagan followed the high inflation of the 1970s, however, voters were used to the inflation of his first term, so he could still run on “morning in America.” Whereas in 2024, the Democrats were defeated.
If this voter anger persists over a period of years, though, what can presidents do?
“They could be working with Congress on the affordability agenda, in housing policy, child care, energy, health care,” Bernstein said. “Some of those solutions take time, but newer policy models tend to include immediate help through some form of subsidies or price caps, like capping energy price hikes.”
No one really knows what weeks or months more of a blockaded Strait of Hormuz will mean for fuel prices — or the global economy.
These measures don’t target “inflation” writ large; instead, they focus on essentials most important to household spending that are unnecessarily expensive because the markets for the items are flawed. But, Bernstein said, “the main acclimation must occur through a combination of time and real wage gains.”
The worst thing a president could do in this situation is introduce more price shocks, which brings us back to Trump. In the 2024 campaign, he promised he would make prices go down “on Day One.” That was always a ridiculous pledge — the president can’t pull a lever and instantly lower prices. But many voters believed him: Republican voters’ inflation expectations plunged to zero after the 2024 election.
Voters might have forgiven Trump at least somewhat for the failed “Day One” pledge had he otherwise done nothing to increase inflation. But he has introduced further price shocks: first, imposing blanket tariffs, then instigating a war with Iran. Gas is averaging $4.23 a gallon across the U.S., up more than 40% since the conflict started. There’s no end in sight for the war: “maximalist demands on both sides,” my MS NOW colleagues reported, “show no signs of softening.” No one really knows what weeks or months more of a blockaded Strait of Hormuz will mean for fuel prices — or the global economy. But don’t expect Americans’ feelings about the economy to brighten anytime soon.
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