Economics is pushing US swing voters to pick Trump

Deplorable economy. Ask an American Democrat about current presidential polling data, and they’ll bellyache about the irrationality of those who want to vote for former U.S. President Donald Trump. Thanks to President Joe Biden’s policies, they’ll say, inflation has come down and the economy has avoided recession. The job market is strong, and, as a bonus, the stock market is up.

If, as Bill Clinton’s strategist James Carville famously said, U.S. presidential elections are all about “the economy, stupid”, then Biden’s second term should be a no-brainer. Voters beg to differ. In the most recent Reuters/IPSOS poll, Biden and Trump would be in a dead heat if the election were to take place today rather than on Nov. 5. But a December poll drilling into swing states showed Biden with just a slim lead in the seven states where the election was closest in 2020 – Nevada, Arizona, Wisconsin, Michigan, Pennsylvania, North Carolina and Georgia. If Robert F. Kennedy, an independent candidate, were added to the ballot, Trump would handily win.

Winner takes some

The U.S. election is decided by electoral votes in each state, which means that the winner of the popular vote gets that state’s full allocation. These allocations are then added together to form a national tally. The system confers oversized influence to “swing states”, where voters are either on the fence or an equal mix of Democrats and Republicans. In several past elections, the winner didn’t carry the popular vote but headed to the White House by taking the swing states. On Monday, Trump won handily the first Republican caucus in Iowa, a state that used to “swing” but is now firmly in the conservative party’s camp. And unless legal cases being reviewed by the U.S. Supreme Court keep him off the national ballot, he is likely to be the Republican pick to challenge Biden in a closely run presidential race.

Part of Biden’s problem is that he took on the world’s most powerful job just as the United States was ravaged by Covid-19. He injected $1.9 trillion in stimulus into the economy, which included direct payments of $1,400 to some households. He also implemented the Infrastructure Investment and Jobs Act, the CHIPS Act, and the Inflation Reduction Act, a flurry of emergency laws aimed at creating jobs and reviving parts of the economy in desperate need of a jolt. Some of the effects of those policies are yet to be felt. For example, workers in some states that lean conservative, like Arizona, should benefit as government subsidies spur the construction of microchip factories.

Thanks in part to those measures, the economy has avoided a recession, the labor market is strong and inflation, which had spiked due to the aftershocks of the pandemic and Biden’s fiscal splurge, has tapered off.

In this context, it’s easy to see how voters inclined to support Biden would view his victory as inevitable.

Bringing home less bacon...

The trouble with this narrative is that the first couple of years have taken their toll on overall perceptions of Biden’s tenure. Because inflation had risen so much, by 2022 real household incomes across the United States were down 5% compared to 2019, according to the Federal Reserve Bank of St. Louis. In Nevada, Michigan, Arizona, North Carolina, and Pennsylvania, Americans did even worse. In Nevada and Pennsylvania, for example, real incomes were down more than 10% during that period.

Though the rate of consumer price increases has slowed and incomes are rising, it is hard for many Americans to shake off the feeling that they have become poorer in the last few years.

Two states buck the trend. Georgia, a southern state that has historically gone to Republican candidates but is now considered “swing”, where real incomes have risen 5% since 2019. And Wisconsin, where incomes tracked the national average.

… in a smaller home

Housing is another sore point for Biden, especially at local level. Political nerds have homed in on a handful of counties that will decide the 2024 election in each of the swing states because they punch above their weight. In 2020, the residents of Maricopa County, Arizona, for example, influenced the vote for the whole state. Biden won that county by just two percentage points.

The Federal Reserve Bank of Atlanta offers granular data on housing by county, and affordability metrics do not look good for the president. Take Kent County, Michigan, which includes the city of Grand Rapids and is a key area for the election. In January 2020, around 22% of the average person’s annual income went to pay for their home, within the 30% threshold that the Fed considers “affordable” for the average American. That calculation takes incomes, housing prices, and interest rates into consideration. By September last year, that figure had jumped to more than 35%.

In Phoenix, which is inside Maricopa County, that data point went from 28% to 45%. In Reno, Nevada, the largest city in the key Washoe County, more than 54% of a person’s annual median income now goes to housing, up from 34% in early 2020. In Wilmington, North Carolina, which Biden flipped in 2020 for the first time in decades, the same figure went from 30% to 48%.

And even if inflation is now abating thanks to aggressive increases in interest rates by the Federal Reserve, many voters are still to feel the benefit. Because such a big chunk of Americans’ paychecks is going towards a roof over their head, even if prices of eggs fall or incomes pick up, moving the needle on their overall financial well-being is hard.

The economy may be pushing swing voters to pick Trump. That said, not everyone lets their wallet dictate electoral preferences. And a lot can change between now and Nov. 5. With Fed Chair Jay Powell signaling cuts to interest rates in the coming months, growth might pick up and people could start to feel better.

The trouble for Biden – and those that support him – is that while they can logically argue he succeeded at the herculean task of steering the country during a devastating pandemic, and Pennsylvanians or Arizonians, say, might have been even worse off without the CHIPS Act, for voters, there’s no easy way of telling. For now, all they know is that they feel poorer than they were four years ago. Unless their mood improves by Nov. 5, they’ll inevitably blame the man in charge.