Inflation vs. Wages: Trump’s Amazing Comeback Explained in Two Charts | 2024 US election

EDITOR’S ANALYSIS

Rising inflation under the Biden administration appeared to kill Kamala Harris’ election hopes.

Of the many possible explanations for US President Donald Trump’s dramatic return to the White House, one towers above the rest: the cost of living.

In the exit polls, 45 percent of voters said they were worse off than four years ago, when President Joe Biden took office, and 24 percent said their financial situation had improved.

Voters who named inflation as their number one concern trumped Trump over Vice President Kamala Harris by nearly two to one, according to an Associated Press VoteCast survey of more than 120,000 voters nationwide.

At first glance, official statistics do not seem to support such an economic situation in the US.

Inflation currently stands at 2.4 percent, well below the historical average and close to the US Federal Reserve’s target of around 2 percent. That’s down from 9.1 percent in June 2022 amid the outbreak of the COVID-19 pandemic.

At the same time, wages have been growing faster than prices since at least mid-2023.

So if inflation is under control under Biden and Harris, why are Americans rejecting their administration so strongly at the ballot box?

The likely answer is in the middle of good economic conditions and the impact on people’s wallets.

Although measuring whether people are better or worse off is difficult due to the different circumstances and multiple ways of transmitting information, there is clear evidence that Americans have less to spend compared to when the Biden-Harris administration took office.

An analysis of government statistics by Bankrate, a New York-based consumer financial services firm, shows that while wages rose 17.4 percent between January 2021 and June 2024, prices rose 20 percent over the same period.

Even if wage growth outpaces inflation, Bankrate predicts that the gap that has opened between inflation and earnings will not fully close until the second quarter of 2025.

Simply put, American consumers remember their money moving forward before Biden and Harris entered the White House, even if Democrats can point to healthy economic growth and low unemployment numbers that would be the envy of many developed countries.

In exit polls, less than three-quarters of voters said inflation had been a cause of great or moderate difficulty during the past year. In contrast, Americans remember that most of Trump’s first term was a period of inflation and rising wages.

In a CBS News poll published in March, 65 percent of respondents said the economy under Trump is good, nearly double the number who felt the same way about the economy under the Biden administration at the time.

Economists’ warnings, before the election, that Trump’s plans to raise tariffs on imports would likely lead to inflation did little to sway voters.

In the end, Harris could not escape the shadow of the Biden presidency, and voters, instead, gave Trump a stunning victory in both the Electoral College and the popular vote.