President Donald Trump’s handling of the economy has resulted in “two Americas” being created, according to one leading economic analyst, and it is also a familiar situation that could spell doom for him and the GOP in the coming midterm elections.
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During a Wednesday segment on CNN, host Sara Sidner spoke with Rana Foroohar, a global economic analyst for the network as well as an associate editor for the Financial Times, about the most recent inflation numbers. Per the latest reports, the rate of inflation slowed down for the second month in a row in July, putting the annual rate at around 3.4 percent.
Despite this trend, Sidner noted that many people “can’t afford their lives,” and pressed Foroohar about why things still feel “so bad” for so many consumers. The analyst explained that inflation can often be a “lagging indicator” relative to consumer sentiment, and does not represent the lived reality that people are dealing with every day when they shop for groceries or fill up their cars.
“How do you feel sitting in your office? How do you feel when you drive past the gas station and see that price? How do you feel in the grocery store?” Foroohar said. “And people have felt pinched for a long time, and it actually takes months after you begin to feel pinched and feel like, oh my gosh, I’m in a cost of living crisis. I can’t afford my life. My house is too expensive. I have to think about medication costs. It takes a while for that feeling to abate. It’s almost like a little bit of inflation PTSD, if you will.”
Foroohar further explained how the economy under Trump has become what many economists call “K-shaped,” referring to a phenomenon where the wealthiest consumers are doing well and spending more, while the rest struggle. This, she noted, explains why many people feel they are in a cost of living crisis, while things like travel spending are also reaching record numbers.
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“It’s been the same answer for years now. It’s the bifurcation,” she explained. “There really are two Americas. There is an America that, you’re absolutely right, is waiting in Newark [Airport]. I just came from there and it’s very crowded… It’s August, people are traveling, actually. Travel is at a record, in fact… There are groups of people that have that money and can do those trips, that top 10 percent of the population, which is primarily what we’re talking about, is spending 60 percent of the money in the economy.”
She continued: “So you can look around and say, okay, restaurants are open, you know, things are happening, the economy is good. But the folks that are more towards the bottom in terms of wages, in terms of jobs, in terms of assets, maybe they don’t have so much in the stock market. Maybe they don’t own a home. They are not feeling good. They are feeling incredibly pressed.”
These issues, Foroohar noted, are on full display in the midterm primary season as voters show support for candidates telling them, “we see you, we feel your pain,” which is primed to doom Republicans in November.
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“We’ve seen that movie before,” she concluded.
