In the middle years of the Biden administration there was an idea that right-wing dominance of the media ecosystem, or simply social media breaking people’s brains, had blinded people to the fact that inflation was actually coming down fast. Indeed, by the time the 2024 election came around, inflation had come down dramatically and was close to what economists consider optimal — between 2% and 4%. (For all the ribbing economists took about predicting the COVID inflation would be “transitory” by any historical metric, it was.) Yet most people refused to believe that inflation had, in fact, been subdued. And “affordability” continues to be the political buzzword of the day going into the 2026 midterm elections. But this always struck me as a basic failure of analysis, imagining that the public at large and economists mean the same thing by inflation. They don’t. That should be obvious. And it probably is obvious to most of us. But a lot of us, including myself for at least part of the time, failed to draw out the proper conclusions.
Put simply, if inflation goes to near 10% and stays there for 12 or 18 months, prices go up significantly. If inflation stabilizes, that price surge is still locked in and essentially permanent. Prices don’t go back down. (Any economics-literate person knows that systemic deflation is actually really bad.) But the public wants prices to go back down. And why shouldn’t they? When there’s a spike in gas prices, the spike eventually ends and prices go down. Why shouldn’t it be the same with everything else? Whether that makes sense in a formal economics sense isn’t the point. If you’re a consumer who is unhappy because your purchasing power has gone down, it doesn’t follow that you’ll stop caring about that loss of purchasing power just because the velocity of rising prices slows down.
I was reminded of this because in the new episode of his Strength in Numbers podcast G. Elliott Morris proposes that if you look at recent economic history through the different prism of “excess prices,” everything comes into focus. As the summary of the podcast puts it, “Elliott’s analysis points to a different culprit: Prices are roughly 10% above where they’d be if pre-COVID inflation trends had continued, and traditional economic models fail to account for this because they use year-over-year inflation rather than cumulative price shocks.” He notes that with this metric, recent public opinion trends all fall into place. It also makes sense of public opinion during the high inflation of the 1970s. The critical additional factor is that you have to adjust for the public’s familiarity with inflation. This always seemed to me a key part of the post-COVID equation. The vast majority of the U.S. population had never experienced high inflation during their adult lives. As a lived experience it was all but unknown. That makes a big difference.
Morris’s take on this is that we’re probably locked into an extended period when the party in power is always in trouble because the public at large is always pretty mad about the economy, an era of one-term presidencies, as he puts it. As a matter of prediction that’s a pretty good bet. But obviously Democrats need to give some serious thought to at least having a strategy for making that not a foregone conclusion. This is all the more the case because Trump has piled vast loads of new inflationary pressures onto the economy — tariffs, energy shortage wars and more. Those are going to be politically deadly for Trump and his party in 2026 and I strongly suspect 2028. But if Morris is right — and I think he is — it won’t stop being an issue in 2030 or 2032. And those are the years when, if the country has a chance, Democrats need to be back in power and, if at all possible, have at least two years of a trifecta when they can push through a layer of fascism-proofing in the federal system. So more thoughts on how to do that in my next post.
