CAMBRIDGE – “It’s the economy, stupid!” This famous mantra, coined by the political strategist James Carville, helped Bill Clinton unseat President George H.W. Bush in 1992, and now it explains another election. The economy played a critical role in the 2024 presidential race, creating the conditions not only for Donald Trump to trounce Kamala Harris, and for the Republicans to gain control of the Senate and the House of Representatives, but possibly also for a counter-elite to usher in a new power structure.
The election’s outcome reflected two seemingly opposing views of the economy, both of which are correct. The interaction between them says as much about the basic economics-related strategies of the two political campaigns, good and bad, as it does about the state of expert economic communication in today’s America.
The message from voter surveys was unambiguous: The economy was one of the two main issues in this election (the other being illegal immigration). When asked for specifics, many said “inflation”; and if pushed harder, they reported being heavily influenced by what they see as excessively elevated prices, and the lack of any sign that they are coming down.
The Trump campaign masterfully exploited voter dissatisfaction with the cost of living. Following Ronald Reagan’s example in 1980, they repeatedly posed variations of the question: “Are you better off today than you were four years ago?”
One reason why Democrats failed to respond is that they were obsessed by another (ironically correct) characterization of the economy. The Harris campaign emphasized America’s “economic exceptionalism,” echoing a point that many professional economists have been making. The Democrats pointed to robust US growth, which has outpaced the rest of the G7, and to recent gains in real wages, owing to the decline in the inflation rate. And, of course, there have been multiple record highs in the stock market.
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