In October 2024, on the eve of the presidential election, the U.S. unemployment rate was 4.1 percent and the inflation rate was 2.6 percent. By historical standards, both these numbers were very good. And they were especially impressive given the pessimism of many economists two years earlier. In 2022 Larry Summers warned that it would take years of very high unemployment to get inflation down from its peak of 9 percent, while Bloomberg put the odds of recession at 100 percent.

Instead by 2024 we had achieved the softest of soft landings.

Despite this stellar disinflation performance, the public mood was extremely sour. Voters who said that the economy was their most important issue favored Donald Trump by 60 percentage points in the 2024 presidential election, clearly costing Kamala Harris the election.

The long-running Michigan Index of Consumer Sentiment is now lower than it was in the immediate aftermath of the 2008 financial crisis. The index is even lower than it was in 1980, when unemployment was above 7 percent and inflation hit 14 percent.

And voters now blame Trump for the perceived bad state of the economy, showing their anger at the ballot box: In the Virginia and New Jersey gubernatorial elections earlier this month, voters who prioritize the economy favored Democrats by 30 points — a 90 point swing.

——Paul Krugman