Stock market up, down unemployment and strong growth – By all measures, the economy was poised to hand Vice President Kamala Harris a victory.
There was an exception, of course inflation, and it seems to have overshadowed other indicators. More than two-thirds of voters say the economy is in bad shape, according to the first results of an ABC News exit poll
Inflation shaped voters’ negative perceptions of the economy and fueled anger at the party in power, as it has done around the world since the pandemic unleashed a wave of rapid price increases, experts told ABC News.
The political power of inflation comes from the visceral and recurring sense of unease caused by high prices, experts added. This sentiment leaves voters unsure of their future and desperate for a leader who can change the nation’s course.
“Inflation has a specific and unique power in elections,” Chris Jackson, senior vice president of US public affairs at Ipsos, told ABC News. “It’s something people see in their faces every day, every time they go to the grocery store or fill up their car.”
He added, “inflation is present in people’s lives. It’s something they’re not upset about and it’s something they rightly or wrongly blame whoever is in charge.’
Pandemic set off the acute hyperinflation that affected almost every country in the world, when global supply chain blockages caused an imbalance between the availability of goods and the demand for them. In other words, too much money was chasing too few products.
In 2021, prices began to rise rapidly in the US, to an inflation rate the peak next year about 9%. Inflation was even higher in many other countries, including Brazil and England, where leaders faced an angry electorate.
In Brazil, President Jair Bolsonaro slashed fuel and electricity taxes in an effort to curb prices in the months leading up to elections due in October 2022, but the nation has replaced it with a leftist challenger.
That same year, in England, Prime Minister Liz Truss responded to the highest inflation in four decades with an economic policy based on tax cuts and energy price controls. He lasted just 44 days in office before market backlash and political turmoil forced him out of office.
The post-pandemic pattern has indicated a high rate of leadership change over the past half-century amid inflationary crises around the world, according to a study by Eurasia Group, a political risk consulting firm. Analyzing 57 inflation shocks since 1970, the firm found government turnover in 58% of cases.
Furthermore, when an election was held as part of an inflationary shock or within two years, it led to a change of government in roughly three out of four cases, according to the Eurasia Group.
“We’re seeing this trend in jet fuel after the pandemic,” said Robert Kahn, managing director of global macro-geoeconomics at Eurasia Group in New York. “The shock of pandemic inflation contributes to a sense of instability and people’s loss of trust in their governments.”
Donald Trump holds a news conference outside the Trump National Golf Club in Bedminster on August 15, 2024 in Bedminster, New Jersey.
Adam Gray/Getty Images
Carola Binder, an economics professor at the University of Texas at Austin who studies the history of US inflation, recently characterized anti-incubator sentiment a little differently: “When people are experiencing and experiencing inflation, they want it. someone or something to blame.’
Inflation has cooled dramatically over the past two years, and is now close to the Federal Reserve’s target rate of 2%. However, this progress has not reversed the jump in prices that comes from the pandemic. Since President Joe Biden took office in 2021, consumer prices have risen more than 20%.
The potential role of inflation in the US election is due to a common lag between when inflation falls and when consumers adjust to new price levels, since a lower inflation rate does not mean that prices have fallen, but rather that they have started to rise. slower pace, experts told ABC News.
“When inflation comes down again, the prices of many critical items remain high, especially for people who are stretched thin and living paycheck to paycheck,” Kahn said.
Consumers will adjust to current price levels in the coming months, but voters will be sensitive to inflation, experts said.
President-elect Donald Trump’s proposals to raise tariffs and mass deport undocumented immigrants risk rekindling rapid price increases, some experts say. he said.
Asked if inflation will reemerge as a major issue ahead of the next midterm elections in 2026, Jackson said, “If the Republicans shoot themselves in the foot, absolutely.”
