In the aftermath of Donald Trump’s victory, many analysts echoed James Carville’s famous 1992 phrase, “It’s the economy, stupid,” suggesting economic factors were decisive. This perspective argues that voters prioritize their financial well-being, and Trump’s win, despite other contentious issues, was primarily due to economic considerations. As economists, we acknowledge the significant role of the economy in elections, yet a closer look reveals a more nuanced picture.
The narrative of a simple economic win for Trump becomes complicated when considering the economic backdrop under President Joe Biden. Leading up to the election, the White House itself highlighted robust economic growth, with real GDP surging by 12.6 percent. This expansion surpassed forecasts and outpaced peer nations, accompanied by strong business investment and low unemployment. These indicators would typically favor the incumbent party.
However, the prevailing media explanation points to a disconnect between macroeconomic data and voters’ lived experiences. Rising grocery prices and cost of living pressures, it’s argued, left voters feeling economically strained, driving them to seek change. While this resonates with some segments of the electorate, attributing Trump’s victory solely to economic confusion oversimplifies the dynamics at play.
Our research offers an alternative perspective: it’s not just the state of the economy, but the type of economy that influences electoral outcomes and partisan preferences. Challenging the simplistic view that voters merely reward or punish incumbents based on economic performance, our analysis of 89 years of data reveals a deeper interplay between economic conditions and political choices. The key insight is that a strong economy, counterintuitively, tends to favor Republicans, while a weak economy benefits Democrats, regardless of who holds the presidency.
History provides compelling illustrations of this thesis. During the depths of the Great Depression in 1932, Americans overwhelmingly elected Franklin D. Roosevelt, a Democrat. Similarly, in the midst of the Great Recession of 2008, Barack Obama, another Democrat, entered the Oval Office. These historical examples suggest that economic downturns create an environment conducive to Democratic victories. Conversely, periods of strong economic growth, while seemingly beneficial for any incumbent, appear to create a political landscape more favorable to Republican candidates. This framework provides a more comprehensive understanding of the economic factors that contributed to Trump’s victory, moving beyond the simplistic notion of “the economy” and towards a more nuanced appreciation of how different economic climates shape voter behavior and election results.
