‘Trump’s midterm trouncing underscores inflation’s political poison’

President Donald Trump’s Republican Party suffered a crushing defeat in the US midterm elections, highlighting how inflation is politically toxic. Joe Biden learned this lesson two years ago, and Republicans faced the same fate on Tuesday as Democrats secured a "clean sweep" victory, taking control of the House of Representatives and the Senate.

Trump entered the midterms with personal approval ratings and economic trustworthiness scores near record lows, primarily due to his "poor handling of the economy." Consumer confidence measures had dropped to their lowest levels in decades, with many expressing surprise at the outcome despite strong economic growth, high stock market, and record household wealth.

Unemployment was at a "full employment" rate of 4.2%, and jobless benefit claims were near their lowest since the 1960s. So, what caused voters to overlook these economic indicators and elect Democrats? Inflation was the primary culprit. It has been above target for nearly six years, exacerbating Americans' financial struggles. While Trump's tariffs and the Iran war contributed to a crippling affordability crisis, the impact of tariffs began to fade by 2026, but energy prices surged following the Iran war.

Average diesel prices hit a record high of over $6.50 per gallon in September, and gasoline exceeded $5 per gallon in June. Inflation, unlike unemployment, disproportionately affects poorer individuals, who must spend a larger portion of their limited resources on essentials such as food, housing, transportation, and energy. Surveys indicate that a majority of people associate inflation with negative economic and social effects, making it a top priority for policy action.

Historical studies suggest that a 1-percentage-point increase in inflation leads to a 7-percentage-point decrease in the probability of an incumbent president receiving a favorable approval rating, while a similar increase in unemployment reduces that probability by only 3 percentage points. Despite differing academic opinions on the relative impact of unemployment and inflation on public well-being, the 2026 electorate clearly prioritized inflation over other economic factors when casting their votes.