Why inflation made it impossible for the Democrats to cling to power
The message from American voters is clear: four years under Joe Biden and Kamala Harris have made them feel poorer, not richer.
The Democrats' defeat in an election that was tipped to be the closest in a generation marks one of only a handful of times in the last century when the incumbent party failed to secure a second presidential term.
But after three years of soaring inflation and spiking interest rates across the world, Harris can take some small comfort in the fact that she is hardly alone in her defeat.
Her bid for the White House has come in a record election year, where nearly half the world's population is headed to the polls.
Incumbents in countries anywhere from the UK, Austria and South Africa to India have struggled to cling on to power.
"Being in government is tough at the moment," says British polling guru Sir John Curtice.
"We saw the rebuff the French government had in the summer, the dramatic rebuff the UK government suffered and also both the Scottish and Welsh governments."
A particular challenge facing political leaders going to the polls in 2024 is convincing voters of their economic credentials after the price of everyday items surged to a multi-decade high.
In the US, inflation peaked at 9.1pc in 2022 – the highest level since the early 1980s. In response, the Federal Reserve raised interest rates at the most aggressive pace in four decades.
High inflation is a hurdle that the US author and political analyst Geoffrey Kabaservice in April branded "a real president-killer". Tuesday's election suggests he was right.
The economy was the second most cited priority among voters at the ballot box, with 79pc of those who said it determined their vote backing Trump.
"The impact of people's perceptions of the economy is pretty clear. They are much darker now than they were back in 2020," Sir John says.
"When Trump was having to defend his record, 20pc of people thought their family finances got worse over the last four years. It is 45pc for this year's exit poll.
"Therefore it makes it much more difficult for somebody like Harris, who is associated with the current regime, to hang on. That strikes me as clearly a very substantial factor."
The backlash from voters against Biden and Harris's record stands in stark contrast to how their credentials are portrayed among economists.
The Economist magazine last month ran a special report on America's economy, describing it as "the envy of the world".
On the face of it, statistics show how the US has outperformed its peers. Germany's economy is still the same size as before the pandemic, while the UK's is only 2.9pc bigger. Canada and Italy have done a bit better, growing 5.5pc. Yet they still fall well short of the US's incredible growth spurt of 10.7pc.
Meanwhile, inflation is marginally above the Federal Reserve's target and unemployment is near historical lows at 4.1pc.
However, these statistics have failed to translate to how the everyday consumer feels about the money in their pocket.
"I do think the economy and inflation was a major, if not the most major, factor in the win. It was people not happy with their current situations," says Stephen A. Myrow, the managing partner of Beacon Policy Advisors in Washington.
"If you compare prices of everyday staples and housing today to four years ago, they're significantly up. Voters don't look at it like economists. They know how much they're paying now versus how much they paid four years ago."
Grocery prices in cities are up 22pc since Biden's first term started in January 2021. A gallon of petrol costs 37pc more. During the worst price spike a year and a half into his term, it was up 123pc. Rents in cities have risen 23pc in the same time.
Meanwhile, studies show that the cheapest US products have registered the biggest price rises, meaning inflation is hitting working-class voters hardest. Similarly, those on lower incomes also feel most worried about losing their job. Two thirds of all Americans said they were living pay-cheque to pay-cheque when surveyed this summer.
Such figures underline that even if headline inflation may long since have come down, prices are still far higher than they were.
"Kamala's catchphrase was 'We're not going back'. But many people in the end preferred where they were to where they are now," adds Myrow.
"You can't convince people to feel differently than they do. Whatever they felt like about the economy and their own personal finances, no amount of messaging was going to change that."
Yet Americans have in many ways been better off than Europeans in recent years. Real wages grew by 4.3pc in the last two years. Inflation stopped short of the rates seen in countries, including the UK , that relied on Russian gas before the war in Ukraine. In contrast, the US is a net exporter of energy.
In short, things could have been worse for Harris.
"At least [the Democrats] didn't suffer a 20-point drop in support, which the Conservatives suffered here – as opposed to the 4pc swing in the US," says Sir John.
Rishi Sunak faced the humiliation of leading the Conservative Party into its worst defeat in modern history this summer.
Even strongmen aren't immune to the threat of rising prices. Narendra Modi, India's prime minister, imposed a 40pc export tax on onions and introduced local subsidies in an effort to keep prices down ahead of this year's election.
The vegetable is such a key ingredient in Indian diets that past price spikes owing to crop losses and extreme weather have prevented some ruling party candidates from returning to power.
In the end, Modi secured a third five-year term in national elections because of this pre-emptive action. However, in a shock result, his Bharatiya Janata Party (BJP) failed to achieve an outright majority.
It is not the first time onions have threatened to topple the ruling party. During the 1998 Delhi state elections, the BJP suffered a major defeat following a massive increase in onion prices, even after tens of thousands of tonnes were imported from the Middle East and exports suspended to try to increase supply.
Justin Trudeau has suffered a similar fate in Canada, where rising inflation and higher house prices and rents have caused the Liberal prime minister's popularity to sink.
Canada's Conservatives hold a 19-point lead over the Liberals and remain in a strong position to win a big majority government next year.
The struggle of incumbent politicians after the pandemic is a widespread phenomenon, says Jim Reed, from Deutsche Bank.
"It feels like voters have ignored the extremely generous handouts after Covid, and instead focused on the costs of these in the aftermath. The top cost likely being inflation, and although it's fallen back now, voters experience this on a cumulative basis," he says.
He notes that it is the first time since the late 1800s that the incumbent party in the White House has lost three consecutive presidential elections.
Many economists believe inflation is likely to be higher and bumpier in coming decades, as populations age and borrowing soars to finance the net zero transition.
Such shifts suggest that we are entering a new era of more volatile politics where voters' allegiances are fragile.
Or as Sir John puts it: "Lots of advanced Western countries have never managed to regain the levels of economic growth that we had before the financial crisis. People are not entirely sure that their children are going to be better off than they are.
"Some people fear the existential crisis of climate change and globalisation, together with security issues, is generating mass migration. Yep – tough world."
