The economy emerged as the paramount concern for voters in the 2024 election, with approximately 40% identifying it as their most important issue, overshadowing all others. This sentiment translated into a strong showing for Donald Trump among these voters, who supported him by a 22-percentage-point margin. Despite a robust labor market recovery and declining inflation without a recession, many voters remained focused on the persistently high prices they experienced.
The political ramifications of economic policy were significant. While White House officials defended their actions, arguing that the American Rescue Plan (ARP) was necessary given the pandemic's uncertainty, key figures like Senator Joe Manchin expressed concerns about the $1.9 trillion stimulus bill. Manchin warned President Biden that the country had not yet absorbed earlier stimulus packages. The ARP added to existing bipartisan spending measures from the Trump administration, leading to strong demand that collided with crippled supply chains and labor market disruptions.
The combined effect of fiscal stimulus under both Trump and Biden, along with ultralow interest rates and a successful vaccine rollout, contributed to inflation. The San Francisco Fed estimated that fiscal stimulus accounted for about 3 percentage points of the inflation rise through 2021, and the ARP specifically boosted inflation (excluding food and energy) by 0.3 percentage point annually in 2021 and 2022. By December 2021, inflation had reached 7%. This surge in costs made inflation politically "more costly" than anticipated, creating an opening for Trump.
Voters like Thomas Gianchetti, a retired steamfitter, highlighted their personal experiences with rising costs, such as energy bills increasing from $180 to over $240. Even in areas with thriving economies, such as Pennsylvania, where unemployment was below the national average and wages kept pace with inflation, economic anxiety and GOP messaging successfully resonated. This led voters to associate economic hardship with the Biden-Harris administration, even as some economists pointed to overall positive economic indicators like wage growth, employment, and GDP.
Ultimately, the Biden administration's gamble on inflation backfired politically. When the Federal Reserve was pushed to address inflation, raising rates at the fastest pace in 40 years, it was left with much of the burden of cooling the economy. The perception of high costs and ongoing financial strain significantly impacted voters' pocketbooks and their electoral choices, favoring Trump, whom many remembered for his previous economic policies.
