Why did America swing back to the Democrats? It was the economy all along

At face value, it’s not all that complicated. President Donald Trump and Republicans in Congress were elected in November 2024 to fix the economy. Now it’s November 2026, and Americans feel even worse about it than they did two years ago. So, it’s the economy, stupid. But with respect to James Carville, it’s not quite that simple. America’s economy is in surprisingly good shape. Unemployment is low – low enough for economists to consider the US economy to be at “full employment.” Overall consumer spending, the bedrock of America’s economy, has remained mostly resilient. And the AI revolution has revved an economic engine so powerful it’s projected to become the largest spending boom in modern US history. If the economy is so strong, what got Americans fed up with Republicans just two years after they voted them into power? Inflation is back, and voters drew a straight line connecting Trump’s signature policies to their financial anxieties. Tariffs. Lax AI regulation. Strict immigration restrictions. And especially the Iran war. “If it weren’t for the war in Iran, this would be a very different midterm election,” said Heather Long, chief economist at Navy Federal Credit Union. Americans still haven’t adjusted to the significant jump in the price of … well, pretty much everything … since 2021. Inflation had come back down to earth in the last year of Joe Biden’s presidency, but that wasn’t enough to convince voters to give Democrats another chance in 2024. And that anger about the high cost of living has festered throughout Trump’s return to office. Still, Trump and Republicans had a fairly compelling economic story to tell in the early part of this year. The US economy in January posted its best month of job gains since 2024. Manufacturing jobs had turned positive for the first time in 14 months. Big tax refunds from the Republican-passed One Big Beautiful Bill Act were starting to show up in bank accounts. Mortgage rates had fallen below 6% for the first time in three years. The stock market kept hitting record highs, buoyed by AI stocks. Consumer inflation, which had hit a four-year nadir in April 2025, returned close to that low point in January and February 2026. Then America went to war with Iran, and everything changed. Oil prices surged to four-year highs. Diesel prices hit a record. And gas prices had never been this expensive on an Election Day. Americans may hate inflation, but they get particularly irate about high fuel prices. Gas prices are plastered on giant billboards all over town, and filling a tank serves as a weekly reminder about how much more they’re shelling out: High gas and diesel prices alone have added $1,150 in costs for the average US household since the start of the war, according to Brown University researchers. As fuel prices rose, bond yields surged, and so too did mortgage rates – recently rising at their fastest pace in three years. After three straight years of paycheck gains outpacing price hikes, that trend kicked into reverse in March. Rebounding inflation has been eating into workers’ take-home pay ever since – and the average American’s real pay has shrunk since Trump has been back in office. It’s not a surprise that Americans had fond memories of the economy under Trump’s first term. At every point during Trump 1.0, Americans’ hard-earned dollars stretched further than prices – their pay gains nearly doubled the pace of inflation throughout his first four years in office. That’s why Americans polled by CNN in October 2024 favored Trump over Vice President Kamala Harris as a better custodian of the economy by 15 percentage points. No shock there: Biden’s net approval on the economy was -31 points in the final CNN poll taken before he dropped out of the race. Trump’s marks are now worse than Biden’s. By a wide margin: His net approval on the economy is -46 points, according to an October CNN poll. Trump 2.0 has been a completely different story than Trump 1.0. For many Americans, it seems like costs are spiraling out of control and the American Dream is unattainable. The Trump administration and congressional Republicans have laid blame at Democrats’ feet for the poor state of financial affairs they inherited. But some of Trump’s policies – especially his unpopular war – clearly made Americans’ cost of living worse. It’s not just gas prices, which have added about $75 a month to people’s expenses. It’s other costs that voters associate with Trump and the Republicans – some of which are adding hundreds of dollars a month to their bills. For example: Republicans’ failure to extend the Affordable Care Act enhanced subsidies in 2025 sent monthly Obamacare premiums up 58%, on average, for this year. Electricity costs jumped 8.7% during Trump’s second term. Trump has been among the biggest champions of unfettered growth for AI. Trump’s immigration policies and tariffs have raised the cost of auto repairs, which surged 12.3% since Trump took office. They also sent homebuilders’ costs up by 13.3%. Trump’s tariffs added $820 in taxes for the average American household this year, according to the Tax Foundation. “Let’s say, for the sake of argument Biden totally screwed up: That in no way exonerates Trump,” said Steven Durlauf, an economist at the University of Chicago who researches wealth inequality and mobility. “Inflation has been badly managed by Trump. Voters have to place responsibility with the administration’s policies.” All the evidence points to the voters doing just that. That’s a big reason why Trump’s Republican party took a beating in Tuesday’s midterm election. Inflation is only part of the story. Many Americans feel like the economy has left them behind. The K-shaped economy accounts for some of that: Wealthier Americans with money in the stock market and who own a home are significantly more immune to rising costs than less-affluent Americans who are increasingly living paycheck to paycheck. A big part of the problem is the lack of available options to achieve the American Dream: A massive undersupply of childcare options and housing have priced out many folks and have denied access for some who can. “The middle-class ideal is becoming increasingly unobtainable,” said Durlauf. The same is becoming true of the job market. Although still relatively strong, jobs are by no means booming like they had been in the immediate post-pandemic years. Mass layoffs haven’t become the norm, but for folks without a job, applications feel like they’re going into the ether. “Another way to say low-hire, low-fire job market is lack-of-opportunity job market,” Long said. In this economy, many Americans just feel stuck.