It’s the economy, stupid. Or is it?

It is a phrase which has come to mean dogma for politicians across the world. First coined by James Carville, a strategist on Bill Clinton’s 1992 presidential campaign, ‘It’s the economy, stupid’ has long spoken to the belief that it is ultimately the nation’s finances which govern election fortunes. But in the country where the term first gained credence, is all that about to change?

There are finally signs that the inflation which has dogged the UK, United States, and many more leading economies is starting to relent. The spectre of rising prices has a huge influence on voters’ perception of the national economy. Its perceived correlation with personal hardship bridges a gap between the individual and the political which few other issues do. Poll after poll suggests that inflation hits working-class voters hardest, with one indicating that 71% of households have experienced some financial difficulty as a result of it. It has caused obvious concern for the Biden Administration, well aware that their 2020 election was won on the coattails of improved working-class vote in key swing states like Pennsylvania and Michigan. But a curious phenomenon has begun to take hold. US voters consistently poll negatively on the national economy, despite many analyses suggesting it is in a strong if not totally buoyant state.

Although unemployment is at an almost 50-year low, 2/3 of Americans describe themselves as unhappy with the state of the nation’s finances. How much this feeds into a wider decline in trust is unclear, but what is more certain is that there is a regarded disparity between the positive news reported in the media and the personal day-to-day experience of the US people. Around 65% of American citizens feel that it is hard to be happy with the reports whilst their own budgets are squeezed and also doubt the accuracy of such national figures. The challenge that this provides President Biden is a huge one. Just as former President Bill Clinton made the economy and ongoing recession a key plank of his successful 1992 pitch, ‘Bidenomics’ was well placed to be a part of the incumbent’s campaign. After all, in a deeply di- vided nation which seems apathetic about the likely choice of candidates it will face in Novem- ber, who can blame him? If the bread-and-butter politics of low unemployment and falling inflation do not cut it for Biden, it may force his campaign to take a more radical turn. His extensive infrastructure spending and job creation may have been ambitious and impactful but is also likely to attract more firm criticism from the Republicans in an election campaign. Yet polling also suggests that 3/4 of respondents like at least one key tenet of Biden’s investment policies. Or maybe it will be the case that if inflation continues to fall, it becomes a more effective political lever.

All of this will not just be felt in the States but across the Atlantic too. With Labour Leader Keir Starmer likely to face voters in 2024, how he pitches his own economic programme will be a key question of the campaign. Recent reports that the party is considering cutting back on its £28bn Green Prosperity Plan are a sign of an opposition exercising extreme caution. But will financial rectitude cut it? In the coming year, we may well find out, and it could have huge consequences for both the UK and USA alike.