Life is not looking up. Spencer Platt/Getty Images

April 11, 2024   6 mins

When it comes to winning a US election, is the answer still “It’s the economy, stupid”? The phrase, memorably articulated by Bill Clinton’s advisor James Carville, suggests that how Americans feel about their personal finances will determine the election outcome. If this remains the case, President Joe Biden is in trouble.

The Biden campaign constantly reminds Americans that the economy is on a tear, with inflation falling, unemployment near record lows and GDP expanding faster than any other advanced economy. But when economists and politicians cite such figures or talk up soaring stock indices as indicators of economic health, it hardly registers with the average person. Only about a tenth of Americans read a daily newspaper, and nearly half never read one at all. Fewer than a quarter watch television news.

As a result, most citizens judge the state of the nation and the economy from what they observe in their own daily lives: how much they pay to refuel their car; what their grocery bill comes to; whether their credit balances rise or fall at the end of each month; how often they can afford to dine out or go to concerts. They also take into account the number of boarded-up shops or alternatively, new restaurants in their community — and consider how far they need to drive to reach the nearest bank or post office.

Herein lies Biden’s problem. The average American feels worse off today than they did on the eve of the 2020 election, with polls showing that nearly twice as many people think Donald Trump did a good job on the economy than Biden. They’re not imagining it, either. Gas prices, which never broke above $3 per gallon during the Trump years, are now approaching $4 per gallon. Average take-home pay rose nearly twice as fast as the cost of food away from home under Trump, enabling Americans to dine out more often. But since Biden took office, Americans have had to tighten their belts, with their wages failing to match the sharply rising cost of eating out. In fact, for most of Donald Trump’s presidency, inflation was dormant and real wages were rising. Had it not been for the pandemic, which tanked the economy and unleashed some of Trump’s worst buffoonery, Trump might have won the 2020 election.

While the headlines speak of an American economic renaissance, the stories that people tell one another have a very different tone. Yes, the economy is outperforming all its peers, a revolution is underway in high tech, and a huge rollout of renewable energy is creating loads of jobs. But, in the bitterest of ironies, the boom skews towards Republican states, which already dislike Biden, and favours big cities over smaller towns. If your bank branch has closed or your favourite diner has gone out of business, hearing things are roaring in Austin won’t matter much to you. To use the starkest current example, when the Fed and White House talk of inflation falling back down, they simply mean prices are rising at a more measured pace. But for most people, falling inflation means falling prices — sales and discounts. And prices aren’t falling. So what is there to celebrate?

That said, real wages are rising, which will enable workers to gradually claw back their lost buying power. But that won’t happen soon. Using the Fed’s current measure of inflation, a dollar today buys 20% less than it did in 2020, so it would take years of real wage gains of 2%, which is about where they are now, to make back that lost ground. In any event, the Fed has changed the way it measures inflation. Had it still been using the method it used in the early Eighties, during the last big surge in prices, inflation today would be nearly triple what is currently being reported.

Despite all their talk about the booming economy, America’s leaders can’t deny that their compatriots feel noticeably poorer today than they did four years ago. If the November election comes down to a referendum on the economy, Biden looks sunk. His only hope is to tell a story persuading people that while the present is difficult, the future under him will get brighter: not an impossible task, but a tough one.

“Americans feel noticeably poorer today than they did four years ago.”

But perhaps the economy has lost its political significance. There is, in fact, growing evidence that the rules of American politics are changing, and that if economics was ever the dominant mover of voting behaviour, it may not be now. Instead, cultural and existential matters have risen to the fore. The straight economic division that once seemed to prevail in America — that owners vote Republican and workers vote Democrat — has waned.

In its place, new alignments are emerging. As a starting point, one can use the rough rule of thumb that the cities lean Democrat, towns and rural areas vote Republican, and the suburbs remain up for grabs. But within that framework, old loyalties are shifting. African Americans once voted overwhelmingly for Democrats, providing a third of the party’s total support. Hispanic Americans, if less monolithically, did likewise. But in both groups Republicans have been making inroads, particularly among men.

Women, on the other hand, who were once a strong conservative force, have grown more liberal. But perhaps the biggest flipped script of all is the working class. Once a reliable pool of votes for the Democrats, the white working class in particular has broken increasingly Republican — not because Republicans speak to their economic concerns, but because socially conservative workers find the Democratic party increasingly too “woke”.

More than 40 years ago, Ronald Inglehart argued that Western societies were becoming so prosperous that bread-and-butter issues would dominate politics less, as people began orienting their politics around what he called post-materialist values. Perhaps he was right, as Americans turn their attention from pocketbook issues to forms of self-actualisation, focusing on what kind of country they want to live in. In this universe, what Trump and Biden represent could end up mattering more than their economic policies.

However, something a little darker may be going on. It may be that Americans see their country’s current moment in the sun as fleeting, dependent on a mortgaged future — and so have concluded that what is at stake is the remains of a declining empire. In that case, the fight may be over what is left after the tide goes out. Politics, formerly a positive-sum game in which everybody got a bit of something, has now turned into a zero-sum game, in which every group believes its gains must come at the expense of another. Thus, with battle lines drawn, the middle ground withers into a no-man’s land.

In this battlefield, Biden has planted his flag as a friend of the working man against corporate power. For years, Democrats have attracted growing scorn over their elitism and dismissive attitudes to common folk. However, Biden has made it his mission to restore the party’s working-class traditions. The unions seem willing to campaign for him with a vigour they perhaps haven’t shown in a good while. If Biden can stem even some of the party’s working-class erosion, he could make an important dent in the Republican constituency: in 2020, he lost the working-class vote to Trump by a margin of 8%, and the white working class by 32%. Assuming he can hold his core constituency among university-educated Americans, and especially among educated women fired up by Republican campaigns against abortion rights, Biden would only need to claw back a small share of this bloc to retain the White House.

Trump, by contrast, isn’t trying to win over fresh pastures. As the November doomsday approaches, he is increasingly making the election not about his followers or the economy — but about himself. Railing against his enemies, vowing revenge, he speaks less about how he will rebuild their communities and restore their pride than he does about his victimhood. No matter how much his followers might sympathise with him, they may not see how any of this will affect their own lives. Perhaps for that reason, if reports from his rallies are to be believed, the enthusiasm he evoked eight years ago appears to be waning.

It’s early days, but a harbinger of what is to come may lie in the polls and betting markets. Before the campaign became a two-man race last month, both showed Biden’s outlook to be grim. But since the two men locked down their nominations, they have begun narrowing sharply. Trump is still in the lead — but it’s just possible that Biden turns out to be a better finisher. To do that, however, he will need to scrap grand rhetoric to tap into the bread-and-butter concerns of ordinary Americans worried about the cost of living, the security of their jobs, and their opportunities for advancement. He must show how he can improve their lives at the most visceral level. As an indifferent communicator, that won’t be easy for him, though what he may have over Trump is an ability to convey empathy. Compassion may turn out to be his strongest asset.

John Rapley is an author and academic who divides his time between London, Johannesburg and Ottawa. His books include Why Empires Fall: Rome, America and the Future of the West (with Peter Heather, Penguin, 2023) and Twilight of the Money Gods: Economics as a religion (Simon & Schuster, 2017).