Under the last administration, real wage growth was lower and inflation higher. The disaffected American worker saw Trump as a potential solution.
by William J. Luther
The Daily Economy
When asked why Donald Trump won the presidency last November, most people point to inflation. That’s understandable. Prices soared under the Biden administration. In the run up to the election, voters cited inflation as a top concern — and most thought Trump would do a better job bringing inflation back down. “Nothing did more to deliver the White House to Donald Trump than inflation,” Greg Ip recently wrote in The Wall Street Journal.
It looks like an open and shut case. But I am not convinced. High inflation was salient. However, voters continued to cite high inflation even after their wages caught up and inflation declined. I suspect voters were actually disappointed in the slow real wage growth they experienced under the Biden administration. This slower real wage growth was not entirely attributable to higher inflation: real wages continued to grow more slowly than they had in the pre-pandemic period even after inflation began to fall and workers renegotiated their wages to account for the excess inflation.