When Ronald Reagan beat Jimmy Carter in the 1980 presidential election, 10 short words proved decisive. After a period in which high inflation had eroded living standards, the Republican challenger for the White House asked voters: “Are you better off than you were four years ago?”
The simple question that resonated so strongly with US voters 44 years ago has resurfaced in 2024.
By any objective measure, the answer to the question today should be “yes”. Under Joe Biden, the US economy has
created more jobs (16m) than during any four-year presidential term since the second world war. In the three years before the Covid crisis caused mass – mostly temporary – layoffs in 2020, the economy under Trump created just under 7m jobs.
And if growth has been modest compared with the far more rapid expansion in the 1950s and 1960s – averaging just over 2% under Biden – it has been considerably faster than in other leading industrial economies.
Every member of the G7 group plunged into recession when the pandemic struck, but the US has posted by far the strongest recovery. Figures supplied by the
House of Commons library showed the US economy almost 11% bigger than it was at the end of 2019, compared with a rise of 3.9% for the eurozone and 2.9% for the UK.
Nor has Europe produced anything as gamechanging as Biden’s
Inflation Reduction Act, which has used generous subsidies to spur hundreds of billions of dollars of investment in clean technology.
But Harris is not – if opinion polls are right – getting as much of a fillip from the economy as she might expect. One possible explanation is that US voters may be better off than they were four years ago, but they don’t feel as if they are.
As was the case in all western economies, inflation surged in the US as a result of the impact of supply-chain bottlenecks after the ending of lockdown restrictions combined with the rise in energy and food prices triggered by Russia’s invasion of Ukraine.
The US was less exposed than Europe to higher gas prices and the peak in inflation was lower at 9.1% than in the eurozone (10.6%) and the UK (11.1%) and has subsequently declined to 2.4%.
According to the
National Institute of Economic and Social Research thinktank: “The divergence in economic performance among advanced economies since the onset of the Covid-19 pandemic has become increasingly evident, with the US notably outperforming its peers.” The NIESR says it is impressive that the US has had faster growth than Europe but lower inflation.
A second reason Harris may not be reaping the benefits of a growing economy is that the fruits of that growth are being enjoyed disproportionately by the better off.
Economists say it is not obvious that Trump’s economic plans – which involve higher tariffs and lower immigration – would make life much better for US workers and in fact are likely to make them considerably worse off.
Nicolò Tamberi, a trade policy economist at the University of Sussex, said tariffs proposed by Trump (60% on imports from China and 20% tariff on imports from everywhere else) would cut imports by 37%, and lead to markedly higher prices.
Despite everything, the latest odds from the bookies suggest Trump may exploit unhappiness about the state of the economy and win on 5 November. That could prompt a simple response from European voters: count your blessings. You may think you have economic problems. Ours are a lot more serious.
news.gallup.com
www.msnbc.com
theconstitutionalist.org
www.nybooks.com
