The NPR Politics Podcast - It's (still) the economy, stupid

Episode Date: August 3, 2026

The economy is growing very slowly, and wages aren't keeping up with inflation, which is keeping gas and grocery prices high. We discuss how politicians are navigating the sluggish economy on the campaign trail and how President Trump is making Republicans' case harder. This episode: senior political correspondent Tamara Keith, political correspondent Ashley Lopez, and chief economics correspondent Scott Horsley.This podcast was produced by Casey Morell and edited by Rachel Baye.Our executive producer is Muthoni Muturi.Support public media with NPR+ and enjoy perks for over 25 podcasts like this one. This show’s perks include bonus episodes and sponsor-free listening. Learn more at plus.npr.org.See pcm.adswizz.com for information about our collection and use of personal data for sponsorship and to manage your podcast sponsorship preferences.NPR Privacy Policy

It's the economy, stupid. It's a political truth that became a slogan in 1992, and it's just as true today. So how is the economy doing and how are candidates talking about it? That's what we're digging into today. It's the NPR Politics Podcast. I'm Tamara Keith. I cover politics. I'm Ashley Lopez. I also cover politics. And NPR chief economics correspondent Scott Horsley also joins us today. Hello, Scott. Good to be with y'all. So, Scott, how is the economy? doing? The economy is doing okay. It's not going gangbusters. We got a report card recently on growth domestic product, which is sort of the broadest measure of economic activity. And it shows that during the spring, the U.S. economy grew in an annual rate of 1.5%. Now, that's certainly better than

shrinking. But it's slower growth than we saw earlier this year. It's certainly slower growth than we saw during the period when Joe Biden was in the White House. The consumer piece of that, you know, the largest driver of our economy is consumer spending. And consumer spending held up pretty well during the spring quarter, although there's some question about how much of that spending is really being driven by just the wealthiest families in the country with other folks kind of treading water. That's the, you know, the so-called K-shaped economy where the well-off, who are feeling buoyed by a booming stock market and rising home values, there. They're swimming along just fine, and everyone else is kind of trend in water.

And everyone else is complaining about how much things cost? Yeah, I mean, inflation continues to be elevated. And importantly, in recent months, prices have been going up faster than people's wages, which is a little bit of a turnaround. We've had two plus years where people's wages, their paychecks were growing faster than prices. So they were kind of regaining some of the ground that they lost. in 2021 and 22, and we saw that runaway inflation, that regaining of ground has now been stopped, and prices are rising faster than wages in recent months, and so people are seeing their real

purchasing power shrink. I mean, prices are rising in the things that people spend a lot of their money on, which are groceries and gas, things that they need day to day. And so as long as those items in their budget keep on growing, it's harder for them to save money, get out of debt, do all the big things that a lot of families. are trying to tackle coming out of the pandemic. So, yeah, I mean, time and time again, you'll hear voters complain about just like the sort of things in their budget they cannot change, getting more expensive. So, Scott, there is another component of the economy. I think we should talk about,

which is jobs, the other key component there. So how is the job market doing? Yeah, the job market has kind of been in this holding pattern where we're not adding a whole lot of jobs month after month, but we're also not seeing a whole lot of pink slips go out. So people who are working don't have to worry too much about the prospect of getting laid off. The layoffs remain quite low by historical standards, but we're also just not adding a whole lot of jobs. So the unemployment rate remains relatively low, but for people who are just trying to break into the job market or who are unlucky enough to lose their jobs or having a tough time finding a new one, more than a quarter of all the people who were unemployed this summer had been out of work for

more than six months. Yeah, I've been hearing that a lot from voters. not everyone is having this experience with the economy because a lot of people have kept their jobs, but the people who have lost jobs feel very pessimistic about their ability to find a new one in any meaningful time frame. The longer the economy kind of struggles along, I mean, things aren't dire yet, but no one's optimistic that things will be roaring anytime soon. So the longer the economy stays this way, the more pessimistic people are that they'll be able to find a job at some point. Ashley, what are you hearing from politicians? Like this is an election year. How are politicians, people running for office, talking about the economy? Well, I mean, let's start with Democrats who are probably in the best position to talk about this, right, because they're not in control. So frustration about the economy is not there. Cross to bear at this point. It's not, you know, they can say it's not their fault. Look, you voted for Republicans and here's what you get. But we have like a plan to tackle this. And the plan, you know, it runs a gamut. There's a lot of focus on housing, you know, make it easier to build housing.

that sort of thing. And then there's the thing I'm hearing the most, which is interesting, which is framing the economic woes of this country as a corruption issue. What the Trump administration has done to deregulate has led to the situation that the economy is in right now. Actually, let's hear from a Democratic candidate in Michigan's Senate primary. His name is Abdulazayed, and he said this in a debate hosted by W OOD TV in Grand Rapids. All of this has to happen by way of getting the corruption out of our politics. So long as corporations are buying politicians, we can't actually enact these solutions because they're getting the policies that they signed up for when they pay for their politicians.

His campaign has this slogan and sort of a call-and-response chant, which is money out of politics, money in your pocket, Medicare for All. That is how he is pitching it. Arguably, Democrats across the spectrum are talking about the economy, one way or another. A lot of them are talking about affordability and how much things cost from housing to groceries. But, you know, another thing that voters care about a lot is wages. And I don't know that we're really hearing that much about wages. No, and wage growth has has slowed. Wage growth was about 3.2% for the 12 months ending in June. That's not enough to keep pace with

inflation. And when you have a kind of stagnant job market with not a lot of new jobs being added and not a lot of churn, there's really no incentive for employers to raise wages more rapidly the way they were doing a few years ago. I mean, save like raising the minimum wage, there's not really a lot that like Democrats could run on in terms of, you know, increasing wage growth at this point. So, you know, I think the, what Democrats are getting at is, you know, Republicans have also made the safety net around everyone harder to access. It would be one thing if grocery prices were going down, but also snap, the federal food assistance program was also cut substantially in the one big beautiful bill Republicans passed last year. So, you know, people are feeling the pinches from either side.

And Democrats are at least pitching like, hey, we're going to shore up a lot of the safety net that has been chipped away at in the second term of Trump's presidency. And we're going to find ways to hold companies accountable and politicians accountable who aren't who they argue are not doing their job to. make life more affordable for people. So this weekend, the sister of the late Senator Lindsey Graham, Darlene Graham, did an interview on Fox News. And something really stood out to me from it. She is running in this flashed GOP primary in South Carolina to replace her brother on the ballot. And she was asked what her agenda would look like. Lindsay was probably much more focused on national security. And I know that's important. But I'll probably be focused more on affordability, what matters to the families in South Carolina, the struggling families.

Because I know what it is to struggle from week to week, paycheck to paycheck. So definitely affordability. Yeah, so here is a Republican candidate for Senate endorsed by President Trump talking about economic struggles. Ashley, what do you make of that? I mean, I will, I mean, this is just a clip, but I will say you are here. more Republicans talk about affordability, you are not hearing a plan. The only plan I have heard are tax cuts, which is something that Republicans already delivered. Mostly those tax cuts benefited the wealthier Americans, but Republicans seemingly do not have an actual plan from what I have

heard to tackle affordability. But they know that the president and their party is unpopular right now, mostly on the economy. Polls show that for the first time since, I don't know, 2010, more voters, think that Democrats are more trustworthy on the economy than Republicans. It's a serious problem for the party. So yeah, they're going to talk about it. But short of tax cuts, I've heard very little to address the problem of people not having enough money to afford the things they need in their life. I think you're also just seeing a level of frustration with the people that are in power right now. Just as we saw Democrats punished in 2024 because people were frustrated with the high cost living, it's possible. You're seeing Republicans take the brunt of that criticism now since they're the party

hour. And on that tax matter, I think President Trump and his party, they really want credit for those tax cuts that they passed as part of the one big, beautiful bill, including no tax on tips, which he talks about a lot, or in certain parts of the country where property taxes are high, they talk about the state and local tax deduction. It is definitely part of the plan from the president and Republicans in Congress to try to run on gratitude, that they want, they want, they want, credit for having passed that measure. Yeah, but Democrats have effectively relayed to voters that a lot of, yes, some people got tax cuts, maybe not enough to offset the rising prices in this country.

But the other thing that happened is that a lot of people are going to lose health care. A lot of people have lost food stamps. You know, that bill is not very popular. It did a lot of things, including cut a lot of programs that would help people get through a bad economic time. And tax refunds were bigger on average this year than they. were last year. That's one reason consumers were able to maintain their spending during the April, May, and June quarter. But for a lot of families now, those tax refunds have been spent, and now

they're just faced with the high prices. All right. We're going to take a quick break, and we'll have more in a moment. And we're back. And we talked about how Democrats and Republicans are campaigning on the economy. But I also want to talk about President Trump, because he is out there accentuating the positive. The stock market is booming. He says, just check your 401k. As prices are coming down all over the place. Yes, the war with Iran has caused gas prices to go up, but he just needs a little more time. Ashley, are voters buying what he's selling? Well, no. I mean, what is a 401k if tomorrow you can't buy your groceries? I mean, it's a tough one, right? Like this is, and also, I mean, the fact that the stock market is doing well does not reflect immediately in someone's economic situation. It just

doesn't. And so if people's lives are hard, they're checking their budgets day and day out, and they're hearing a politician tell them that everything is fine. I don't know. I've heard this story before. This is how it went with Joe Biden and his then re-election until, you know, the end of his campaign. Voters were really frustrated hearing lawmakers tell them that everything is fine. The data's fine. Ignore how you're feeling. Yeah. And also data tells you, I mean, this is a more Scott's bag, but like data tells gives you a picture of one very specific thing. When people's lives give you a million stories about how things are going. Yeah. And when the president says that prices are coming down all over the place. That's just not true. You can certainly cherry pick individual prices that have come down, for example, eggs, but overall, the cost of living is still going up and up and up. It was up 3.5 percent for the 12 months ending in June. And, you know, you can draw a straight line between the president's decision to go to war with Iran and the more than a dollar a gallon increase we've seen since then in the price of gasoline. Diesel prices across the country, on average, are now averaging more than $5.

a gallon. That has the potential to raise the cost of everything that gets shipped around or travels by truck or train. So these are real consequences and people aren't blind. They notice it. So what's interesting is like actually this is something we in the Swing Voter Project ask voters every month, which is like whose economy is this at this point? And you know, earlier this year, people were still blaming Joe Biden for the economy. But once that war in Iran started, things changed. People see that as a choice. Prices in general. inflation that was still being blamed on Joe Biden. But, you know, even tariffs a little bit, people expected that, you know, that was something Trump was trying that would eventually

sort itself out, even though they didn't like tariffs. But voters now say Trump chose this war and gas prices are 100 percent his fault. Now, whether they are supportive of the project of the war in general, most aren't. And even people who are in general, you know, not opposed to the war don't like that prices have gone up and they do blame the war on it. So it's a, like, Trump is in a tough spot and it's going to be hard to convince voters that it's, there's anything else to blame for this at this point. Yeah, Scott, Ashley mentioned tariffs. We should just note that President Trump has once again started leaning in on tariffs, imposing new tariffs on U.S. trading partners. Explain how that might affect people. Yeah, well, tariffs are a

tax on everything we import, and ultimately those taxes are paid first by the U.S. importers and in many cases by the people who buy the end products. They are not typically paid by the foreign countries or the foreign exporters who send us the goods, although that's something that the president's tried to argue, but people have watched this now. We've had the experience. We know that the tariffs are mostly paid by U.S. importers and ultimately, in some cases, by their customers. The Supreme Court struck down a lot of Trump's tariffs earlier this year, but the White House has moved swiftly to rebuild that tariff trade barrier. And, you know, the president likes the revenue that tariffs bring in. So he's gone back to the well. He's now using a different legal rationale,

ostensibly attacking trading partners for not doing enough to crack down on forced labor. But the end result for businesses and consumers is the same. Now, these tariff rates are, in many cases, lower than the tariffs that the Supreme Court struck down, but they're much higher than the import taxes that were in place before President Trump came back to the White House. So this is still a tax on U.S. businesses and ultimately U.S. consumers. Yeah, and it's fascinating because President Trump is saying that long term, it is going to improve the U.S. economy. It is going to reshore manufacturing, bring back jobs that have been gone and seem to be going away. Still, He is a true believer, but it's just not clear to me that he has convinced voters of that?

No, because the thing that voters want him to solve right now are prices, our high prices. And something going to work out in five years from now doesn't solve their current problems. And also, I've heard voters say that they want also to bring manufacturing, some manufacturing jobs back to the United States. They are not opposed to that larger project. But I will say largely, economists pretty much agree that while it would be good for the American economy to bring back a significant part of the manufacturing base that was lost, there is very little evidence that raising tariffs would, in the short term, bring a lot of those jobs back. Yeah, the U.S. has lost 75,000 manufacturing jobs since President Trump returned to the White House in the beginning of last year. So it's very hard to argue that there's some sort of reshoring success. Now, are there individual companies that have decided to move? jobs to the U.S. from someplace else? Yes. But in the aggregate, tariffs have not created a renaissance for U.S. factories. tariffs have just been a cost burden on U.S. businesses and consumers.

I do kind of just want to come back to where we started in a way, which is that this is a midterm about the economy. And I think that candidates have realized that voters are certainly making that clear. They are. angry, they are frustrated, and the anti-incumbent sentiment that is out there is at least in part a result of people feeling like, you know, the American contract is broken. The idea that you can work hard and get ahead and buy a house and raise a family, that feels like that's just not attainable for a lot of people anymore. Yeah. I mean, the fact that a lot of Americans feel locked out of homeownership, especially young people, is where I think a lot of the bigger

frustrations with the economy are coming from. Like, yeah, sure, maybe gas prices would come down. But I actually don't think that would solve. I don't think that would solve most of Donald Trump's problems. I really don't. I think that what you're seeing right now in the economy, I mean, just to like back up a little bit, I've heard economists call this like a little treat economy. People, yes, you see consumer spending sort of plugging along because all people can't afford are the small stuff. But building actual wealth requires things like home ownership, having enough money to even participate in the stock market, which a lot of people don't. So this is why you are seeing numbers that look, hey, okay, pretty well, but everyone feels really crappy about the economy.

And you know, for a president that rode voter frustration to re-election and back into the White House to dismiss those ongoing concerns about affordability and, in fact, to pour salt in the wounds by starting a war or imposing tariffs that make affordability worse, it's kind of surprising that Trump has not taken the lesson of Joe Biden's lost to heart. Yeah. All right. Well, we're going to leave it there for today. Thank you, Scott. Always good to be with you. I'm Tamara Keith. I cover politics. I'm Ashley Lopez. I also cover politics. And thank you for listening to the NPR Politics Podcast.