Watch out, GOP: The economy is roaring, but most Americans aren't feeling it

  • "The economy" may be roaring, but for most voters their economy is not.
  • The positive news Wall Street savors — robust corporate profits, rising stock prices, surging output growth — deliver the greatest rewards to a relatively modest share of more affluent Americans.
Customers pump gasoline into their cars at a gas station in the Bronx, New York, where gas prices rose to over $3 per gallon in June. 
DON EMMERT | AFP | Getty Images
Customers pump gasoline into their cars at a gas station in the Bronx, New York, where gas prices rose to over $3 per gallon in June. 

From a distance, the 2018 midterm election campaign poses a mystery: With the economy so good, why are prospects for President Donald Trump's party so bad?

But a closer look solves it. "The economy" may be roaring, but for most voters their economy is not.

The difference between those two things reflects the income inequality that has defined America's modern economy. The positive news Wall Street savors — robust corporate profits, rising stock prices, surging output growth — deliver the greatest rewards to a relatively modest share of more affluent Americans.

The rest don't feel it all that much.

"Fifty-one percent of the electorate lives paycheck-to-paycheck," explains David Winston, a strategist for GOP leaders battling to save their House majority. "Their issues are wages and the cost of living. Ultimately for those folks, the question is, are those paycheck-to-paycheck dynamics getting better?"

"When you talk about 'the economy' writ large, that is an abstraction for people," adds Geoff Garin, a pollster assisting Democratic efforts to recapture the Senate. "When you talk about getting to the end of the month and being able to pay your bills and set some money aside, that's not an abstraction."

The recent rise in oil price illustrates the divergence. Good for capital investment, job creation, and stock values in the energy sector; bad for average families as higher gas prices erode their wage increases.

That's why Democratic candidates more than Republicans emphasize steps Congress and the Trump administration have taken to roll back Obamacare. Those steps fuel health insurance premium increases that further erode wage gains.

In a recent survey for the Democratic Senate campaign, Garin asked voters across 13 Senate battleground states which set of economic facts is most important: big increases in jobs and middle-class tax cuts, or wages not keeping up with inflation and health costs. A 62 percent majority — including 91 percent of Democrats, 72 percent of independents and 34 percent of Republicans — chose the latter.

"If the Republicans had a compelling economic story to tell, they'd be telling it," Garin observes. "It's not because they haven't thought of it. It's because it doesn't work."

Instead, Republicans in close races look for traction on other issues. In Virginia's 7th District, a super PAC allied with Speaker Paul Ryan links Democrat Abigail Spanberger to terrorism even though she's a former CIA counterterrorism agent and Republican incumbent Dave Brat is an economics professor. In Kentucky's 6th District, incumbent Republican Andy Barr attacks Democratic challenger Amy McGrath for being "a feminist" who supports abortion rights.

As it happens, culture-war attacks like that often alienate better-educated, upscale voters who have benefited from tax cuts and swelling portfolios. Trump and Republican candidates have hemorrhaged support from white college graduates.

The decades-long stagnation in working-class incomes has repeatedly rattled whichever party holds power.

In 1992, voters frustrated over the economy fueled Ross Perot's independent candidacy and Bill Clinton's victory over President George H.W. Bush. In 2006 and 2008, they put Democrats in charge of Congress and Barack Obama in the White House.

In 2010 and 2014, as Obama struggled through the aftermath of recession, they ousted Democrats from control of Congress. In 2016, what Trump called "the forgotten people" in Midwestern states made him president despite Hillary Clinton's arguments that Democratic policies had yielded "real progress" for America's economic recovery.

That doesn't mean accelerating growth and reduced unemployment doesn't help limit Republican vulnerabilities. Ready access to jobs relieves stress for some hard-pressed voters and improves assessments of the nation's direction, though a majority still considers America "on the wrong track."

"It's a cap on the angst," argues Bill McInturff, a Republican who conducts the NBC News/Wall Street Journal poll with Democratic counterpart Peter Hart.

It also creates an opening for Republicans to argue their policies will eventually fatten the pocketbooks of average families even if they haven't already. Their candidates have just over seven weeks to make the case.

"The challenge for Republican campaigns is to make the No. 1 issue the No. 1 issue," says Winston, the House GOP pollster. "Do they have the creativity to do that? We haven't finished yet."

WATCH: Where Trump gets credit for the economy. And what could go wrong.