Why high prices toppled Democrats -- and other governments around the world

This year’s election results made one thing clear: People really don’t like paying more for everyday expenses.

And when prices soar, the politicians who are in power often pay for it — as Vice President Kamala Harris and Congressional Democrats experienced firsthand.

Among those fed up with the high cost of living was Theresa Wolfe, a Trump supporter in St. Petersburg, Fla.

“It affects my budget and everyone I know, because we’re paying more for groceries,” she says. “It’s shocking. I mean I had a heart attack at Publix when a bag of tortilla chips, I think it was $7.99.”

A survey by the Associated Press found high prices were the number one concern for about half of all Trump voters. They punished Harris and other Democrats, just as inflation-weary citizens have toppled governments around the globe — from Italy and Argentina to Pakistan and the U.K.

The Labor Department’s latest cost of living report is set to be released on Wednesday. Even though inflation has cooled significantly — from a peak of 9.1% in June of 2022 to 2.4% this September — many voters remain unhappy with the cumulative price hikes of the last two years.

“Even my daughter, who’s a liberal, is a Trumper,” says Wolfe. “We’ve had enough.”

Inflation can topple governments

Maziar Minovi, CEO of the Eurasia Group, has studied the political reaction to dozens of inflation spikes going back decades and found the party in power was about twice as likely as usual to be ousted.

“When there is an inflationary shock across the world, the risk of the incumbents getting kicked out — no matter what party or persuasion they are — goes up a lot,” he told NPR.

Minovi’s research shows voters aren’t inclined to forgive inflation, even when — as in this case — it’s happening all over the world.

“It also didn’t seem to matter much to voters if the price surge occurred in isolation or was part of a global inflationary shock,” Minovi and his colleague Robert Kahn wrote in a research note to clients. “Throw the bums out either way.”

Prices soared in many countries in recent years, primarily because of the supply shocks that followed the pandemic and the war in Ukraine. But policymakers in the U.S. may have amplified the price pressures by pumping trillions of dollars into an economy that couldn’t keep up with the resulting jump in demand.

That started during the Trump administration and continued under President Biden, when Democrats in Congress passed the $1.9 trillion American Rescue Plan.

Burned by the sluggish recovery after the Great Financial Crisis, when they felt the government hadn’t acted boldly enough, Democrats were determined not to make the same mistake.

“I think the price of doing too little is much higher than the price of doing something big,” Treasury Secretary Janet Yellen told CNBC early in 2021. “We think the benefits will far outweigh the costs in the longer run.”

Going big did help the economy

There was a payoff for going big this time. Employers added millions of jobs. The tight labor market forced businesses to offer higher wages. And the U.S. economy bounced back faster from the pandemic recession than most other countries.

Still, in the minds of many Americans, those gains were outweighed by the soaring cost of living.

“Economists are going to have to reckon with the fact that the public would have preferred a slower recovery with much higher unemployment, as long as prices had been stable,” University of Michigan economist Betsey Stevenson tweeted.

After all, former President Barack Obama handily won re-election in 2012, even though the unemployment rate was still 7.7%.

It’s not clear how much lower inflation might have been with a less aggressive government response. Other countries did less to cushion the blow from the pandemic, but still suffered big price shocks and similar political fallout.

“People were just pissed off. And they voted incumbents out,” says Ernie Tedeschi, an economist who served in the Biden administration and is now with the Yale Budget Lab.

Humbling moment for economists too

The Economist magazine ran a cover story last month calling the U.S. economy "the envy of the world." But frustrated voters dismissed talk of easing inflation and other rosy statistics. After all, you can’t eat GDP.

“We as economists have to be humble that those sorts of measures don’t speak to normal people,” Tedeschi says. “And normal people have other measures that speak to their well-being.”

President-elect Trump hasn’t offered a real prescription to lower prices, other than increased oil drilling.

And economists say some of his proposals — like sweeping tariffs and mass deportation — would likely make inflation worse.

Nevertheless, millions of voters like Theresa Wolfe were frustrated enough with the current cost of living to take a chance on Trump.

“I have to tell you, my first reaction was relief,” Wolfe said after Trump’s election. “It’s a historical comeback and the people have spoken.”