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The affordability crisis is dominating midterm election campaigns in the US ahead of voting in November.
Voters across the country are grappling with the high costs of basic needs — food, energy and housing — which have skyrocketed after the pandemic.
Worryingly for Republicans, President Donald Trump’s war with Iran and his global tariff regime are further fuelling inflation.
Once one of Trump’s strongest issues, the high cost of living has become a liability for the president. In August, 64 per cent of registered voters disapproved of the president’s handling of inflation in an FT poll conducted jointly with Focaldata.
How economic issues beyond headline inflation affect voters in battleground states will be crucial in determining who wins the House of Representatives and Senate this November.
The FT’s Affordability Tracker, which will be updated monthly, will monitor price changes for basic groceries, petrol, electricity and housing both nationally and across battleground states.
National snapshot
At the national level, the Consumer Price Index shows the immediate inflationary impact of Trump’s Iran war, which he launched on February 28. It has been primarily felt in the higher cost of energy. But the conflict has also pushed up the price of other goods, such as groceries, as higher fuel costs for truckers and farmers feed through to other parts of the economy.
Housing, petrol and electricity
While CPI offers a helpful snapshot of national price trends, other data sources are needed to home in on state-level differences, especially in states that will be competitive in the upcoming midterm elections.
While petrol prices have increased everywhere, certain states — such as Alaska, Michigan and Maine — have been especially hard hit. Voters in those states may be more sensitive to Trump’s handling of the Iran war and its effect on petrol.
In battleground states, where neither party has a safe majority and race outcomes have the potential to tip the balance of power in Congress, there are outliers in price changes in both directions compared with the national average.
Food costs
Food prices have fluctuated throughout Trump’s presidency and not all changes are due to executive decisions. Beef, for example, is at historic highs because of widespread drought as well as inflation, higher interest rates and expensive feed.
Egg prices, which soared in price at the beginning of Trump’s second term, have come down significantly as farmers have restocked egg-laying hens. Trump has said declining egg prices are a sign that his policies have brought down prices across the board, which is not true.
Food prices also vary significantly across the country. In Texas, for example, beef prices are lower than the national average due to the state’s proximity to the supply chain, including major feedlots and processing facilities.
Price hikes vs wage growth
Whether or not wages keep up with increases in the cost of living is an important factor determining how keenly voters experience inflation.
Even though wage growth may be in line with, say, the change in housing prices, the latter can still be unaffordable.
Inflation sentiment: how bad do things feel?
Beyond the numbers, how pessimistic Americans feel about the economy matters just as much as the prices they pay.
While inflation growth rates slowed after the pandemic, sentiment remained negative among Americans who were still struggling with price increases. During Trump’s second term, inflation expectations have swung up and down after big policy announcements such as the launch of the president’s ‘liberation day’ tariffs and the Iran war.
