What lies behind the ascendance of Donald Trump and his Make America Great Again movement? All sorts of demagogic political appeals — racism, sexism, anti-immigrant stereotyping — have played integral roles in the rise of the Right, of course. But a fundamental underlying driver is popular disillusionment with an economy that has for decades failed millions of people.

That is the argument of our new working paper for the Institute for New Economic Thinking (INET), which analyzes the macroeconomic roots of the collapse of the political center in the United States. The affordability crisis hurting working- and middle-class US households is a long-term emergency that is rooted in inadequate pay and insecure jobs, not just (recently) rising prices, and has eroded the social underpinnings of America’s economy to a breaking point.

We begin with an analysis of the record of the Biden administration on wages and incomes — to highlight macroeconomic policy’s wrenching impact on the population as a whole over a long period of time. We consider real hourly wages, real weekly earnings, the so-called employment cost index (see Figure 1), and real median family and household income, and the conclusion is plain and simple: running the economy “hot” under Joe Biden’s watch did not structurally improve hourly wages, weekly earnings, or incomes growth relative to pre-pandemic trends.