As U.S. President Donald J. Trump goes to war against some of America’s closes allies, such as Canada and France, in a quest to end globalization, the U.S. Economy, domestic and global markets struggled under the weight of what may ultimately prove to be a futile quest.

Bankrupt Forever 21 Closes Stores In Mimic Of Online Rivals

“Store Closing” signs at a Forever 21 store in New York, US, on Friday, March 21, 2025. After filing for bankruptcy, Forever 21 plans on closing its last remaining stores in the US as the brand pursues a model that is similar to its online competitors. Photographer: Yuki Iwamura/Bloomberg via Getty Images

Samiha Charles, CRDN
March 21, 2025

The state of the U.S. economy has always been a defining issue in presidential elections, but in 2024, some would argue that it held an even greater weight. However, in the early days of the Second Trump Administration, little more than sixty days in, that weight of the election role is being tested. Historically, economic sentiment—how people feel about their financial situation—has become one of the strongest predictors of voter behavior. Despite key indicators suggesting recovery, such as GDP growth and historically low unemployment, many Americans remain dissatisfied due to persistent inflation, skyrocketing housing costs, and stagnating wages. The divide between economic data and public perception is shaping the political landscape, making it clear that the economy will be a major battleground for both parties.

The Economic Landscape and Public Perception

By most traditional measures, the U.S. economy is doing well. Unemployment rates remain low, GDP growth continues at a steady pace, and major industries have rebounded post-pandemic. However, the reality for everyday Americans tells a different story. Inflation on essential goods—food, rent, healthcare—has left many struggling to make ends meet. Wages, while rising nominally, have failed to outpace inflation, leading to reduced purchasing power for middle-class and lower-income workers.

According to the U.S. Bureau of Labor Statistics (LNS14000000), unemployment remains at historically low levels, yet the sentiment among voters is far from optimistic. Many blamed government overspending for inflation, while others point to corporate price-gouging as the real culprit. Either way, the feeling of financial strain has created a deep distrust in economic leadership, forcing presidential candidates to aggressively campaign on economic policy.

Key Economic Indicators: What’s Driving the Anxiety?

A closer look at the numbers reveals why economic optimism is hard to come by:

• Inflation Trajectory: While inflation has cooled from its 2022 highs, it remains above pre-pandemic levels. Grocery bills are still high, and rent increases continue to outpace wage growth.
• Unemployment vs. Underemployment: The official unemployment rate remains low, but the number of Americans working multiple jobs to survive is rising.
• Wage Growth vs. Cost of Living: Although wages have increased, inflation-adjusted earnings show little to no improvement, meaning real purchasing power remains stagnant.
• Housing Market Crisis: Homeownership has become unattainable for many, with rising mortgage rates and sky-high home prices locking out first-time buyers.

This economic reality disproportionately affects middle- and lower-income Americans, who feel that no matter how hard they work, they are falling further behind. The disconnect between strong economic indicators and public dissatisfaction is setting the stage for a high-stakes election where economic messaging will make or break campaigns.

How Different Voters View the Economy

Voters’ economic anxieties vary by demographic, but some clear trends emerged:

• Middle-Class Struggles: Rising costs and stagnant wages have fueled resentment, particularly among suburban voters who once felt financially secure.
• Generational Divides: Millennials and Gen Z, burdened with student debt and rising rent, feel increasingly disillusioned about their financial future.
• Racial and Economic Disparities: Black and Latino communities continue to experience higher unemployment rates and lower wages despite overall economic gains.
• Rural vs. Urban Perspectives: While urban voters focus on rent prices and wage stagnation, rural voters often feel left behind by an economy that has shifted away from manufacturing and agriculture.

With economic sentiment playing such a pivotal role in voter decision-making, it inevitably feels as though the candidate who best addresses those concerns will have a clear advantage.

Candidate Economic Platforms: Starkly Different Approaches

During the last election, Republicans and Democrats presented voters with two vastly different economic visions:

• Republican Proposals: Lower taxes, deregulation, and reduced government spending. The argument: Cut government intervention, and businesses will thrive, leading to lower prices and more jobs.
• Democratic Strategies: Targeted relief, stronger labor protections, and increased taxation on the wealthy to fund social programs. The argument: Economic inequality is the real issue, and corporate responsibility must be enforced.

Key Policy Clashes:

• Taxes: Republicans pushed for tax cuts across the board, while Democrats advocated for increased taxation on corporations and high earners.
• Wages: Democrats favored a higher minimum wage and stronger worker protections, while Republicans argued that market-driven wages create better opportunities.
• Inflation Response: The GOP, as is the case with Mr. Trump, blamed Biden’s spending policies for inflation, while Democrats argued that corporate greed and supply chain disruptions have driven up prices.

According to the polling, ultimately, voters’ economic concerns dictated which approach they trusted more.

Historical Precedents: When the Economy Decides Elections

History has shown that when the economy is bad—or at least when voters feel it’s bad—incumbents struggle:

• 1992 (Clinton vs. Bush): A mild recession cost George H.W. Bush re-election as Bill Clinton capitalized on the economic downturn with his now-famous slogan, “It’s the economy, stupid.”
• 2008 (Obama vs. McCain): The financial crisis sealed John McCain’s fate, paving the way for Barack Obama’s victory.
• 2020 (Biden vs. Trump): The economic fallout of COVID-19, paired with Trump’s handling of the crisis, played a major role in his defeat.
• 2024 (Harris vs. Trump): Poor consumer sentiment, paired with Congress’s inability to implement immigration reform, played a major role in Ms. Harris’ defeat.

If inflation and cost-of-living concerns remain high, history suggests that economic dissatisfaction could be a major obstacle for a presidential candidate.

The Global Factor: How International Events Impact the U.S. Economy

Beyond domestic concerns, global economic instability is also shaping voter sentiment:

• Trade Relations: The U.S.-China trade war and ongoing tariffs continue to affect American industries.
• Geopolitical Tensions: The war in Ukraine and tensions in the Middle East have driven up energy prices, contributing to inflation.
• Global Recession Fears: Economic slowdowns in Europe and China could impact American exports and financial markets.

Candidates need to address these global challenges while reassuring voters that their economic policies can withstand international uncertainties.

The Economy Defined the 2024 Election

Economic sentiment—not just raw data—seemed to have played an arguably decisive role in the 2024 election. While the numbers may suggest recovery, voters’ day-to-day struggles told a different story. Inflation, housing affordability, and stagnant wages remain key concerns, and whoever best addressed those anxieties seemed to have had the upper hand, as polling suggested that that person was Mr. Trump.

The question isn’t just “How is the economy doing?” but rather, “How does the economy feel to the average American?” That distinction seems to always play an outsized role in whom becomes the president. However, at the rate Mr. Trump and Elon Musk are reshaping the federal government, that may not be true going forward.