Democrats are searching for explanations to Tuesday’s thorough defeat. Aside from obvious considerations – low turnout, 6th year election, etc. – there are several arguments that the economy was a big reason Democrats lost so thoroughly. It was polled, once again, as the most important issue concerning voters this election. However, this stance presents a bit of a paradox. For one, the economy is not all that bad. In fact, it’s doing pretty well. The US is outperforming other economies recovering from the global recession. The US has steadily added jobs each month for several years. Unemployment is below 6% for the first time since 2008. The stock market has been breaking records in recent months and performing well generally for the last few years. Gas prices are low. The housing market is recovering. Factory production and jobs are up. Corporations are enjoying record breaking profits. Economic confidence is higher than it has been since 2008. Despite a slow recover, the economy is relatively strong.
This normally bodes well for the incumbent president’s party in election years. That was obviously not the case Tuesday.
Some argue this disjuncture is because of income inequality. Many pollsters, political analysts, and reporters are arguing that while the economy may be improving individual voters are not reaping the benefits. And therefore, they are not rewarding the incumbent party in the way that they normally would.
This is almost certainly not the case. The overwhelming majority of research shows voters are much more likely to consider the national economy than their pocketbook. Individual economic circumstances may play a small role, but for the most part perceptions of national economic conditions overwhelm other economic considerations.
Similarly, inequality is not new. The income gap started growing in the early-1970s. Unless the US has reached some unseen tipping point, it is unclear why income inequality would matter in this election and not in others. For example if inequality was to have affected voting decisions, the relationship between the economy and voting would have likely started to decouple in the 1990s when inequality increased sharply under Clinton. However, that hasn't occurred.
It’s more likely that Democrats’ failed to affect voters’ perceptions of the national economy. As Lynn Vavreck points out, voters’ perceptions of the economy matter more in midterm elections than in presidential years. And further, partisanship has an effect on perceptions of the economy. It acts “as a lens through which perceptions of the state of the nation’s economy are filtered.” Democrats' ability to change Republicans’ perceptions of the economy was likely minimal.
However, it is also possible they failed to convince their own partisans that the economy was, in fact, performing well. Democrats’ attempts to localize their races and distance themselves from the President also put distance between them and a solid national economy. During the campaigns we heard very little about steady growth, lower unemployment, or the other factors that could have played well for Democrats. It’s entirely possible many did not believe these trends were good enough to campaign on. It’s also likely that many states in which these races took place still had struggling economies, which according to a new paper by Ansolabehere, Meredith, and Snowberg (2014) can affect perceptions of the national economy. However, that wasn’t the case in Iowa, Colorado, New Hampshire, South Dakota, and Virginia, all of which have unemployment below the national average. It's also possible that so many fundamentals pointed away from Democrats it was never a messaging battle they could have won.
Regardless, the key takeaway is that income inequality was almost certainly not one of the structural issues that contributed to the Democrats defeat this Tuesday.