Why Did Inflation Topple the Democrats?
Financial Times columnist John-Burn Murdoch has called the year 2024 a "graveyard of incumbents" due to all the incumbent politicians losing their battles for re-election all over the world. And the U.S. Democrats in 2024 were no exception.
The Democrats lost 3.7 percentage points of the vote in 2024 compared to 2020, but that's enough to get you drummed out of the White House in a polarized nation that's split 50-50.
The likely culprit is inflation, which spiked all over the world in response to the recovery of pent-up consumer demand after worldwide COVID-19 lockdowns, COVID-related supply chain disruptions, and increased agricultural prices in 2022 after the Russian invasion of Ukraine.
Another reason we know that inflation is a factor in the Democrat's 2024 loss is that the voters have told us so. Blueprint, a Democratic strategic communications firm, systematically tested 25 possible reasons why swing voters didn't vote for Kamala Harris. Blueprint didn't just look at each reason in isolation, but forced voters to choose between two randomly selected reasons for not voting for Kamala Harris & say which reason was more personally compelling to them. In this battle royale of competing explanations, the top reason was "Inflation was too high under the Biden-Harris administration," which had an average score of +24. (In other words, if voters had to choose between two competing reasons not to vote for Kamala Harris and inflation was one of the reasons, they were 24 percentage points more likely to choose inflation as the bigger influence on their vote.)
So, inflation explains why Kamala Harris lost to Trump, right? Not so fast.
The reasons for Kamala Harris's loss were definitely inflation-related, but it's a little simplistic to say that inflation alone caused Harris to lose. One reason is that inflation peaked in the United States at 9.1% in June 2022, but Democrats pulled off a record-breaking overperformance in the November 2022 midterm elections only five months later. Pundits had predicted a "red wave" in 2022 due to the high inflation and low approval ratings for Biden, but that wave completely fizzled out.
If inflation is the answer, why did inflation hurt the Democrats in 2024 but not 2022? I think a major reason is that increased turnout in a presidential election year changed the composition of the electorate. In midterm elections like 2022, the electorate is more likely to be composed of habitual, frequent voters who are more likely to be affluent and college-educated. In a presidential election year, the increased importance of the campaign brings out less frequent voters, who are more likely to be economically insecure and have lower levels of education.
Misinformation certainly played a role, which may have made voters with lower levels of education and media literacy more vulnerable to being misled. According to research by the polling firm Ipsos, voters who held misinformed views about crime, immigration, and the economy were more likely to favor Trump over Harris. On the issue of inflation specifically, Ipsos asked voters whether the statement "Inflation in the U.S. has declined over the last year and is near historic averages" was True or False. Voters who correctly answered that the statement was True favored Democrats by 53 percentage points, but voters who believed the statement was False (and thus inflation was going up) favored Republicans by 19 percentage points. The loss of Harris to Trump was partially driven by voters who mistakenly believed that inflation was going up when it was actually going down.
Both right-wing media and legacy mainstream media emphasized inflation over economic recovery in their news coverage in 2023. According to a Nexis/Uni search of news articles during 2023, 720 newspaper articles emphasized inflation, while only 18 articles emphasized economic recovery, even though yearly inflation in 2023 had dropped to 3.4% when compared to the much higher inflation in 2022.
On the other hand, I don’t think you can blame the influence of conservative media alone for why the Democrats lost to Donald Trump. The United Kingdom has a very large infrastructure of right-wing newspapers and tabloids, but that didn’t stop the center-right UK Conservative Party from getting ousted this year in July 2024. In fact, the UK Conservative Party had the worst electoral performance of all incumbents in the major democracies this year, with a loss of 19.9 percentage points of the vote, whereas the US Democrats’ losses were much smaller (3.4 percentage points).
I think the explanation must go back to how the 2024 presidential election brought less frequent, more economically insecure voters into the electorate. I found a very interesting paper, What Caused the Pandemic-Era Inflation?, co-written by Nobel Prize-winning economist and former Federal Reserve chairman Ben Bernanke. The paper argues that the conventional wisdom among economists in 2021 was that the recovery from COVID-19 was going to cause inflation by increasing wages. Instead, inflation increased, but not because wages went up, but because of price shocks that increased the cost of consumer goods while wages stayed stagnant.
This is the reason why I think increased voter turnout in 2024 probably hurt the Democrats more than it helped them. Historically, Democrats have generally benefited more from higher turnout, while suffering electoral losses in low-turnout environments that bring out a more affluent, less blue-collar electorate. Unfortunately for Democrats, the rise of Trumpism and Donald Trump has overturned conventional assumptions about turnout helping the Democrats.
If inflationary pressures are primarily experienced by voters in terms of high commodity prices at the grocery store while wages remain stagnant, voters who make less than $100K per year will be suffering more than voters who make more. As a result, we would expect voters making under $100K to shift to the Republicans, while voters making over $100K would be less likely to shift.
And that's exactly what happened.
Voters making under $50K went from greater than +10 pro-Democratic in 2020 to a little less than +5 Trump in 2024. Similarly, voters making between $50K and $99K went from +5 pro-Democratic in 2020 to +5 pro-Trump in 2024. By contrast, voters making over $100K went from over +10 pro-Trump in 2020 to +5 pro-Democratic in 2024.
In other words, what the average voter believes about inflation may be completely misinformed, but that doesn't mean that the price squeezes they feel at the grocery store aren't real.