'It's the economy, stupid' — inflation, not war or politics, dominates the midterms

With less than a month to go before the US midterm elections, inflation has emerged as the defining issue that could determine the outcome. Six years of steadily accumulating price increases have weighed heavily on voters' daily lives. The same inflation that hobbled the Joe Biden administration and the then-ruling Democratic Party in the 2022 midterms has returned with greater force — this time threatening President Donald Trump and the Republican Party.

Overall consumer prices in the United States have risen 29 percent over the past six years based on the Consumer Price Index, and the cost of everyday essentials is now about 30 percent higher than in 2020, the Wall Street Journal reported Wednesday. According to the US Department of Labor's Bureau of Labor Statistics, the CPI rose 3.4 percent in August compared with the same month last year. While that is well below the more than 9 percent inflation recorded in 2022, the cumulative weight of years of price increases continues to squeeze consumers.

Economists say consumers feel the pain of years of accumulated price increases far more acutely than they do any single month's inflation reading. Because it takes a long time to adjust to a new price level, the burden does not ease quickly even as the rate of inflation slows.

"Voters are extremely impatient and anxious about inflation," said Stephen Weymouth, a professor at Georgetown University's McDonough School of Business.

The Wall Street Journal noted that inflation's impact on the midterms will depend on which voter groups feel the greatest strain. Energy price increases hit lower-income households particularly hard, the paper said, because they spend a larger share of their income on gasoline.

Wage growth has also failed to keep pace with price increases over the past six years, deepening voter frustration. In July and August, the rate of inflation exceeded the rate of growth in average hourly wages.

"When consumers see rising grocery prices eating into their wage gains, they feel like they're being hurt," said Neil Mahoney, an economics professor at Stanford University.

Some costs not fully reflected in the CPI have also surged. Out-of-pocket medical spending per person in the United States rose about 47 percent between 2020 and 2026.

Borrowing costs have climbed rapidly as well. Prices for housing, childcare, auto repairs and pet services have all risen faster than average hourly wages over the past six years.

The debt burden is growing too. More than half of workers' wage gains in recent years have gone toward debt repayment, according to the Century Foundation, a progressive think tank.

However, the outlook for US consumer spending has brightened. The Federal Reserve Bank of New York's September Survey of Consumer Expectations, released Wednesday, showed that households expect spending to grow 5.5 percent over the next year — up 0.3 percentage points from the previous month and the highest reading since May 2023.

Even so, consumer sentiment is deteriorating. The latest consumer confidence data from the Conference Board, a nonprofit economic research organization, showed the overall Consumer Confidence Index retreating to near the 80 level — its lowest point in roughly 12 years since 2014 — as persistent price increases squeeze disposable incomes.

While economists focus on year-over-year inflation rates, consumers tend to compare current store prices with what they remember paying years ago. "Consumers tend to remember past prices as lower than they actually were, and they are far more sensitive to price increases than to price decreases," said Michael Weber, an economist at Purdue University.

Inflation has historically worked against whoever holds power. In the 2022 midterms, high prices were widely seen as one of the Democratic Party's biggest vulnerabilities.

A recent Wall Street Journal poll found that 60 percent of respondents said Trump's policies had made the economy worse.

Buying a new car in the United States now costs an average of about $50,000, and a single fill-up at the gas station runs roughly $60 — putting Trump, who made inflation a central rallying cry against the Biden administration, squarely at the center of the blame game over high prices, the Wall Street Journal noted.

"Voters can easily connect the Trump administration's policies to high prices," Weymouth said.

Despite the criticism over high prices, the White House has continued to insist the economy is improving under Trump. "The Democrats and Joe Biden broke the economy and squeezed American families, and President Trump is cleaning up the damage caused by their failed economic policies," a White House spokesperson said.

Among voters, lower-income households feel the burden of high prices most acutely, and analysts say their response at the polls could prove significant. Rising energy costs hit them particularly hard because they spend a larger share of their income on gasoline — and lower-income voters are also a core part of Trump's political base.

Estimates by the Federal Reserve Bank of New York show that this year's inflation has placed a far heavier burden on households in the bottom 40 percent of the income distribution than on those in the top 20 percent.

In response, Republican lawmakers have been emphasizing that while inflation still exceeds the Federal Reserve's 2 percent target, it has fallen sharply from its peak. But Weber cautioned against that message. "Campaigning on 'the rate of price increases has slowed down' is a bad idea," he said, "because that's not how consumers experience prices."