Partisan Perspectives on the Economy: The Reign of Feelings Over Fact and the Irreconcilable American Divide

Christopher Tran

Source: Flickr.com

Introduction

Currently, a major topic of contention is the economy, which the majority of Americans view as performing poorly. Yet, the cost of living crisis and the economy are two different things. Though they intersect in many ways, there is a clear dissonance between the reality of the economy and the way Americans perceive it. There is significant public discontent over the rate of inflation, which millions across social media have not been shy in expressing. Despite the Biden Administration’s successes in curbing inflation, millions of Americans still feel prices are too high, and their fingers point to inflation as the culprit.

This raises several questions: What role does inflation play in the cost of living crisis? If inflation is not the root cause of the crisis, what is? How have partisan divisions defined the American economic outlook and social attitudes toward the economy? Can Americans overcome the partisan divide when it comes to their perceptions on the state of the economy? On average, Americans are generally biased, viewing the economy more negatively when their opposing party is in power. However, this issue is multifaceted, requiring analysis through political narratives, corporate actions, and government policies. We will examine these dimensions to explore the root causes of the cost of living crisis and the politics that influence public opinion.

Inflation

“Inflation.” It is a term we have heard this election cycle, perhaps more than our names, often with a negative connotation. But most people have no idea of its implications and effects beyond its literal definition—“a general increase in prices and fall in the purchasing value of money”—and that it can also be a positive thing. When inflation is high, the value of the dollar is worth less. Therefore, the money one has saved up, or the same paycheck one has received in the past, is now worth less. In some nations, pay is regularly adjusted to account for inflation, but in the U.S., the federal minimum wage has remained $7.25 for decades. This is a matter that has garnered mass criticism from the American public, as in 2024, it is impossible to meet a decent standard of living anywhere on $7.25 an hour. Furthermore, the issue of the federal deficit becomes linked to inflation; a high deficit increases expectations for higher inflation in the future and erodes trust in the U.S. dollar. 

However, if there was no inflation, our economy would remain stagnant. A moderate amount of inflation is necessary to incentivize spending, promote production, and lead to aggregate demand for production to meet. Therefore, the Federal Reserve conducts monetary policy with the aim of “keeping inflation low and stable” around a rate of 2%. Beginning in February 2021, U.S. inflation rose every month, culminating in a 7.2% rate during June that year (Federal Reserve). In August 2022, President Joseph R. Biden signed the Inflation Reduction Act into law, with economic experts predicting it would, at earliest, only impact inflation by the end of 2024. This landmark piece of legislation aimed to lower inflation through the reduction of the federal deficit, stepping away from volatile energy markets in favor of renewable energy sources, and creating hundreds of thousands of jobs every year (Stewart). 

The law also increased Internal Revenue Service (IRS) funding to collect more taxes that people already owe. The IRS estimates the tax gap from 2011-2013 (the difference between what is collected and the total amount owed) was over $441 billion—most of which is caused by the wealthy. A 2019 study found that “underreporting was five times higher among people making more than $10 million annually than for those making under $200,000” (Sarin & Summers). Collecting these missed taxes would help pay off the federal deficit, which would, in theory, lower inflation. 

Cost of Living 

Looking at Federal Reserve data, by October 2023, inflation was down to 3%. It has not surpassed 2.8% as of January 2025, with most months hovering around a manageable 2.6%. In 2024, the average rate of inflation was 2.5%, compared to 6.55% in 2022, a 62% decrease. Despite this, the cost of living crisis has continued to dominate political conversations. Millions of people have taken to social media platforms like TikTok and X (formerly Twitter) to complain about the cost of basic needs, notably groceries. According to a 2024 New York Times article published in August, “voters have blamed President Biden for rising prices, pointing out that food costs have soared over the past four years.” The same article mentions that “Trump, when accepting the Republican nomination last month, highlighted grocery costs and said that he would ‘make America affordable again.’” It is clear the issue of inflation has become inherently political in nature. The article admits the “White House has little control” over grocery prices as their rise has been the “result of a mix of supply and demand pressures, many tied to the pandemic and other global events” (Ngo). 

Tariffs

Vice President Kamala Harris, on the campaign trail, promised voters that she would stop companies from price gouging. President Biden took a similar stance on high prices, pointing toward corporate greed as the culprit. Former President Trump has also appealed to Americans' financial worries in his campaign. Trump has promised to impose new tariffs on goods coming into the U.S. from Canada, Mexico, and China—regarding the former two, a flat rate of 25% on all goods and tacking an extra 10% tariff on all goods coming from China. According to the BBC, Trump promised voters that none of this would hurt Americans, stating it would be a “cost to another country.” 

Economists have “almost universally” considered this statement inaccurate. For one, tariffs “are paid by the domestic company that imports the goods, not the foreign company that exports them” (Chu). The same BBC article cites multiple studies and surveys suggesting that the ultimate burden of tariffs will fall mostly on consumers. The Peterson Institute has estimated that Trump’s tariffs would cost the average American household about $1,700 per year (Clausing & Lovely). The Center for American Progress estimates an even higher, $2,500 to $3,900 annual loss for a middle-income household (Chu). 

The irony cannot be overlooked that so many Trump voters have cited their reasons for supporting him as relating to the economy. According to the Associated Press, concerns over “everyday expenses helped Trump” win the 2024 election, with many worried about “post-pandemic inflation.” Voters who felt “inflation was the most important factor for their vote were almost twice as likely to support Trump over Harris” and 60% of voters considered the economy “the most important issue” currently (Boak & Thomson-Deveaux). 

Partisan Views on Economy

The economic issue has become partisan to a concerning degree. In a PBS interview, Carola Binder, an economics professor at the University of Texas at Austin, explains that politics influence people’s perceptions of the economy: 

“When they're of the same political party as the president, they expect lower inflation.

And when they're of the opposite party of the president, they expect higher inflation.

During the Biden administration, that partisan gap in expectations of inflation got a

lot bigger. So, as inflation started really rising in 2021 and 2022, Democrats still

expected inflation to be about the same as it had been before. But Republicans'

inflation expectations rose a lot.”

This explains why, “despite slowing inflation, solid growth, and low unemployment,” Americans remain dissatisfied with the economy (Adam Tooze, PBS). However, an explanation does not offer a solution, and the problem is growing. Though partisan shifts in economic views are not new, they have become greater in recent decades. Data indicates that “Republicans react much more strongly to a president from the opposite party than Democrats do, disproportionately [affecting] the national mood during this Democratic administration” (Lopez).

Social Media: Feelings Over Facts

Furthermore, social media exacerbates negative economic sentiments. A New York Times article details the disconnect between economic statistics, which indicate an economy making a strong recovery with low unemployment and wage growth outpacing inflation, and the social media landscape of TikTok, which “seems more in line with both consumer confidence data and President Biden’s performance in political polls” (​​Smialek and Tankersley). Some social media algorithms even incentivize negative content, as they have the capacity to garner more interactions and, in turn, earn more ad revenue. Smialek and Tankersley assert that consumer attitudes toward the economy have never before been so consistently depressive, pointing out that “voters rate Mr. Biden badly on economic matters despite rapid growth and a strong job market.” 

The term “vibecession” has come to define this social attitude for how negatively people feel about the economy based on “vibes” and not data. While grocery and housing prices are up, wages are up as well. Instead of viewing this as a net-zero or the economy correcting, people are likely to feel they are paying more. This is not to say the cost of living crisis does not exist. Many companies have promised to lower prices after being accused of price gouging, however, the situation is nowhere near as dire as social media would suggest. 

Growing Polarization: Social Issues

Although the Biden Administration has passed historic legislation and will go down in history for its achievements, the current outlook for the future of the Democratic Party is grim. The problem Democrats face is partly a lack of education. After decades of Republican lawmakers cutting funding for public education, it cannot come as a surprise that so many people believe unreliable sources or fail to comprehend graphs and charts. A huge factor in the partisan nature of perspectives on the economy is Trump’s masterful use of social issues, like race, religion, and sexual identity, to facilitate division among the working class. According to Professor John Ehrenberg, “the Republican party, or rather the Trump party, has become the party of beleaguered white people.” 

Unfortunately, the solution to the cost of living crisis requires working class Americans to vote in their best interests, and they just aren’t great at that. People who make $70,000 a year are so worried about transgender people and what restrooms they use that they will vote for Trump, despite the fact that he has (1) promised to enact tariffs that would hurt middle class Americans, (2) proposed lowering the corporate tax rate, further enriching the wealthy, and (3) did not facilitate any meaningful positive change for middle to low-income Americans over his first term. 

The Center on Budget and Policy found that Trump’s tax policy was skewed to benefit the rich; the top 1% of households averaged a tax cut of $50,000 compared to an average of $600 for the bottom 60% of the population. Trump’s tax law was not only expensive and detrimental to the U.S. revenue base, costing over $1.9 trillion over ten years, it failed to deliver the economic benefits Trump claimed it would: “workers who earned less than about $114,000 on average in 2016 saw ‘no change in earnings’ from the corporate tax rate cut, while top executive salaries increased sharply… the tax law’s 20 percent pass-through deduction, which was skewed in favor of wealthy business owners, has largely failed to trickle down to workers” (Marr et al.).

Class Solidarity (Or Lack Thereof)

If Democrats are the party trying to solve the cost of living crisis most effectively, why are their efforts lost on voters? Harris spent much of her campaign attempting to appeal to the middle and working classes, but the majority of them showed up to the polls for Trump. The problem is that the Democratic Party has lost its working class base, who most strongly felt the effects of mass deindustrialization in the 1980s. 

Toward the end of the Carter Administration, the U.S. faced the problem of economic stagnation and inflation, i.e., “stagflation,” and was forced to step away from the Keynesian economic policies that had worked to pull America out of the Great Depression. Under Keynesian economics, a progressive fiscal tax policy combined with massive government spending had penalized wealth and rewarded labor. After decades of things being skewed in favor of the working class, Keynesianism yielded to Reaganism, changing everything. Reaganism centered on three main ideas: (1) a regressive tax policy which favored wealth as opposed to labor, (2) deregulation, cutting back on the regulatory and administrative state, (3) privatization, turning over to private enterprise what had previously been done through government spending programs. 

Populism

Trump has made it clear through his actions that he is not a Reaganite, but an entirely different breed of new authoritarian populism. Responding to American deindustrialization, Trump understood that the Democratic Party had turned its back on the large working class coalitions that had formed its base in the 1940s and 50s. Concerning the 2024 election, a Yale study states: “many voters are looking for someone to blame for the surge in inflation that occurred in 2022-23 [leaving] prices higher than they were before the pandemic.” The study found that Americans looking for an “inflation villain” are more susceptible to populist speaking points, even from figures (or rather grifters) who “have no business experience and minimal understanding of economics.”

Trump understands exactly how to use economic anxiety to rally a political base. Though public outrage over the cost of living is genuine, it has been strategically amplified for political gain by those on the Right. The cost of living crisis itself has been blown out of proportion, with fingers being pointed at all the wrong people and/or institutions. Yet, there is some truth to it: post-pandemic housing and gas prices remain higher than they were before COVID-19. So what are the root causes?

Corporations May Not Be At Fault

Though inflation has been reduced from its worrying 2021-2022 levels to a manageable rate of around 2.6%, prices remain high. When it comes to the price of everyday items, many people, including President Biden and Vice President Harris, have pointed the finger toward corporations. In a practice called price gouging, large companies take advantage of high inflation to raise prices, higher than the rate of inflation, and don’t bring them down, even when inflation decreases. But when it comes to groceries, perhaps the category of daily needs most discussed online, corporations may not be at fault. 

Yale Professor Jeffrey Sonnenfeld, economist and former presidential advisor Laura Tyson, and Stephen Henriques of the Chief Executive Leadership Institute wrote an article debunking multiple senators’ claims about price gouging. Blame for the high price of groceries has been placed on retail grocers, but Sonnenfeld, Tyson, and Henriques point out that this claim is inaccurate. They use the “much-cited cost of eggs” as an example, explaining that “market efficiency drove prices up in response to an unprecedented wave of avian flu that caused the unfortunate loss of 100 million hens and a third of the U.S. egg supply.” 

This extends to many other grocery items, as companies had to “raise prices in a balancing act between cost recovery and customer value” due to “stretched supply chains, rising geopolitical tensions and conflicts, commodity price volatility, and other idiosyncrasies” that put pressure on costs (Sonnenfeld et al). This combination of factors resulted in inflation, which, in theory, further worsened the problem. But in reality, the Federal Reserve found that “price increases (implemented to support profits) in the most recent economic recovery contributed a ‘surprisingly’ lower amount to inflation than the historical average” (Glover et al). While the financial pressures on American households should not be ignored, “populist claims that cast unfounded blame on corporations” play into a “rhetoric [that] only promotes class warfare to the detriment of the American economy” (Sonnenfeld et al).

Root Causes of the Cost of Living Crisis

Aside from groceries, there are other categories where prices have remained high. Housing accounts for most people’s largest monthly expense, and prices are only rising. In January 2020, the median sales price for existing homes was $266,300; by July 2023, it had increased by 57% to $406,700 (Picchi). The main cause of this is the increased number of households formed by baby boomers separating (via divorce or death), leading to increased demand, while the slim amount of available homes means there’s a lack of supply. This, in turn, leads to increased competition in the housing market, driving prices upward.

The global nature of inflation and supply chain interdependence means that the U.S. economy is impacted by global events. The pandemic’s impact on labor markets and consumer demand cannot be overlooked when analyzing the cost of living crisis. Supply chain disruptions caused by the pandemic led to increased food prices by over 30%, which was only worsened by the conflict between Russia and Ukraine. Both countries “are leading exporters of agricultural products to many Middle Eastern and North African countries, and disruptions related to the war [exacerbated] already-rising food prices.” Ukraine is a “leading [exporter] of sunflower oil, rapeseed and barley, corn, wheat, and poultry,” but “even countries not directly dependent may see increased prices… due to an increase in fuel prices that affect food transport costs, a reduced supply of fertilizers, and shrinking global agricultural productivity and supply” caused by the conflict (Human Rights Watch). The International Monetary Fund suggests structural reforms to tackle the cost of living crisis “by improving productivity and easing supply constraints,” and encourages “multilateral cooperation” to facilitate “green energy transition and [prevent] fragmentation.”

Factors of the cost of living crisis, i.e., global conflicts and pandemics that affect supply chains and the production of goods, are mostly outside of White House control. The White House, for the most part, can only react to situations affecting the price of goods and services; proactive policy would require a crystal ball. Regardless, the historic Inflation Reduction Act of 2022 was a huge step in the right direction to ease economic concerns in the U.S. It was impressively passed exclusively by the Democratic party, though it's unlikely Biden and Harris will receive their flowers for this within their lifetimes.

Conclusion

While the partisan attitude toward economic perspectives is not conducive to solving the cost of living crisis, it’s clear which party is working toward solutions for the issue. For Democrats to win the next election, they will require a mass separation of political bias from economic reality to ensure informed decision-making by the American public. Though it’s apparent the issues behind the cost of living crisis stem from deeper causes than inflation, the government should still aim to keep it at a reasonable level. More legislation like the Inflation Reduction Act must be passed to further facilitate the U.S. transition to more renewable energy sources, as our involvement in volatile energy markets is a contributor to inflation, but also due to the millions of jobs this would create. Tax laws must be fixed to generate more revenue from wealthy Americans, which must be used to pay for the deficit and for other government projects. Federal spending in general must increase. 

There has been some talk from Republicans wishing to privatize the U.S. Postal Service; it is crucial that this does not happen. The U.S. government should fund more infrastructure projects across the country, not only due to our infrastructure’s age and condition, but also to stimulate economic activity. The Federal government must also directly tackle the housing crisis; the U.S. needs more affordable housing in areas that aren’t rural. Perhaps the most difficult task would be securing supply chains: finding a way to ensure that certain basics, like bread, will be safe from price raises linked to global supply chain issues. There isn’t a solid proposed solution for that, but perhaps the government could incentivize U.S. farmers to grow wheat.

The cost of living crisis is very real; its tangible effects are felt by all of us who are not the one percent. However, the persistence of inflation as an inherent villain in the narrative of American politics is a direct result of people getting their news from social media, particularly platforms like Facebook and TikTok, which are notorious breeding grounds for disinformation. 

It remains a great irony that the party of “facts over feelings” so often fails to adhere to this dogma. The greatest assets to the Republican Party’s power are control over the media and the defunding of public education. Their downfall will be the double standards of their crooked playbook. When eggs were expensive, it was Biden’s fault, despite global supply chains being out of the Biden Administration’s control, something which the Republicans in power knew. But they didn't (and don’t) care. No one from the Grand Old Party serves the People: every day is about how they can blame Democrats, immigrants, or the transgender community for some new issue, whether real or imagined. 

The United States is entering a dark era of politics; division seems to only grow as those who value compassion and kindness find themselves unable to accept or even mingle with those who do not. In the end, there are no winners besides those who continue to enrich themselves by extracting every bit of wealth from the middle and lower classes while distracting them with social issues. If you take one thing away from this work, let it be this: In all my research of American perspectives on the economy and the cost of living crisis, i.e., a matter of empirical data, the most profound finding is that this country has clearly diverged into two extremes from which there is no plausible path for reconciliation aside from a war to unite us. 

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