David A. Steinberg is an associate professor of international political economy at Johns Hopkins School of Advanced International Studies. His research focuses on international monetary and financial policy. He is also co-author of “The Impact of Inflation on Support for Kamala Harris in the 2024 Presidential Election”, which was published earlier this month.

Rising costs were top of mind as voters cast their ballots in the 2024 presidential election. According to CBS News exit polls, 75 percent of voters reported that inflation had caused them moderate or severe hardship in the past year , with 45% saying they are worse now than four years ago. During his campaign, President-elect Donald Trump promised to end inflation and strengthen the economy. Political economy professor David A. Steinberg explains the role inflation played in the election outcome and what could happen next.

How has inflation affected Americans in recent years?

Inflation in the United States reached 9% in 2022, meaning that the average cost of goods and services rose by that amount. This is the highest rate of inflation this country has experienced in the last 40 years. Inflation has slowed considerably since then, with the overall price level now rising at just over 2% a year, but today’s price level is over 20% higher than it was four years ago. As a result, many Americans cannot afford to buy as many things as they otherwise would.

Image caption: David A. Steinberg

However, the burden of inflation was not equal. Rising prices are particularly problematic for lower income groups. One reason for this is that people with the lowest incomes spend a greater share of their income on necessities. Inflation is also more burdensome for older people, and especially pensioners. When inflation rises, people’s wages often rise as well, to help offset the higher cost of living. But retirees live on fixed incomes, so inflation leaves them worse off.

Inflation, however, is not all bad. In the US, inflation has been linked to a very strong labor market. Jobs are plentiful and many people’s wages have increased. When we look at the economy more holistically, thanks to rising wages, many people’s standard of living has actually kept pace with inflation, if not improved. However, most Americans do not recognize these positive aspects of inflation. Research by Harvard University economist Stefanie Stantcheva shows that people blame inflation for making things more expensive, but they believe they personally deserve all the credit when they get new jobs or raise wages. Inflation does not get the credit it deserves for these positive developments. For these reasons, the vast majority of Americans see inflation as an unambiguous outcome.

What impact did inflation have on the outcome of the 2024 election?

Elections are never decided by one factor, but inflation is one of the factors that helped Donald Trump win the presidential election in 2024. Americans were angry about inflation. In pre-election polls, inflation was usually the most frequently cited concern on voters’ minds. Most voters also thought Trump would do a better job than Harris at lowering prices. After all, Trump has constantly reminded voters that prices have risen much faster during the Biden administration than during the previous Trump term. Trump also pledged to end inflation if re-elected.

My study with Erdem Aytaç and Daniel McDowell shows that inflation has eroded support for Democrats in the 2024 presidential election. We conducted a large, nationally representative survey in the United States in the week before the election. Two types of evidence suggest that inflation hurt Harris and the Democrats. First, we find that people who believe inflation has been higher also report more negative views of Harris and the Democratic Party. In other words, perceptions of inflation are correlated with worse perceptions of the Biden-Harris administration.

Second, we compared opinions about the election among two groups of people: (1) those who were asked to think about how much prices had risen in the past year, just before they were asked for their political opinions, and (2) those who were asked to think about how much prices had risen in the past year. was not asked about inflation. Our results were striking. Simply asking people to think about inflation lowered the approval rating of the Biden-Harris administration and lowered confidence in the Democratic Party leadership’s ability to manage the economy. In other words, when people thought about inflation, their support for the Democratic Party decreased. This suggests that Harris would have been more popular if inflation had been lower or if the Trump campaign had focused less on the issue.

President-elect Trump has pledged to “stop inflation” during his presidency. How does he plan to do this?

It is much easier for presidential candidates to promise to end inflation than for sitting presidents to do so. Some of Trump’s proposed policies could help achieve that goal. For example, its commitment to increase domestic energy production could lower energy prices.

But many of Trump’s other signature policy ideas, if followed through, are likely to do the opposite and worsen inflation. Trump campaigned on raising tariffs, which are taxes on imports. Higher tariffs would raise the prices consumers pay for foreign goods and goods that use imported components. Another Trump signature promise, mass deportations, would likely raise business costs, and those higher costs would be passed on to consumers in the form of higher prices. Finally, Trump wants to cut taxes, which may also exacerbate inflationary pressures. If inflation continues to fall over the next four years, it is unlikely to be because of Trump’s economic policies.