Thought of the Week:
In March 1992, then presidential candidate Bill Clinton famously told an activist who was heckling him at a rally, “I feel your pain.” Later in the campaign, the Arkansas Governor was able to project that sentiment to a nationwide audience during a presidential town hall debate. Just a month before the election, a questioner asked all three candidates how the national debt had affected them personally, and if it hadn’t, she queried, how could they be trusted to find a cure for the economic problems facing the common person with no experience of what’s ailing them. Billionaire businessman Ross Perot mentioned that it had disrupted his private life and business enough for him to enter politics; he noted his modest upbringing and how he was able to live the American dream; and he explained that it was his aim to give everyone with an idea and ambition the same opportunities he had. President Bush initially had difficulty grasping the notion that the question was really about the recession, and not the federal debt; he talked interest rates; and in a near cringe-worthy moment expressed his belief that the question was somewhat unfair in that outside his role as president he hadn’t been personally impacted by the recession. Governor Clinton personalized the issue asking the questioner how she had been impacted; he stated that in his small state when people lose their jobs and businesses close, he often knows both by name; and before the “I feel your pain” statement entered the popular vernacular as a clichéd expression of sympathy, his answer made him relatable to a nation of voters. Even more than James Carville’s “it’s the economy, stupid” catchphrase, it was Bill Clinton’s relatable personality that got him elected. Fast-forward thirty-plus years to where there is now a growing body of evidence in political science and psychology that suggests in today’s political climate, personality often eclipses policy as the primary driver of electoral behavior. In fact, a recent review in Frontiers in Psychology confirms that voter choices are often determined less by a candidate’s policy platform than by the perception of the candidate’s personality traits—authenticity, warmth, boldness, and/or energy. Sure, this isn’t exactly a new phenomenon, but it seems to be accelerating. Congruency models of political preferences from the National Institutes of Health show that people’s voting decisions are often guided by traits they value high in themselves. In other words, voters don’t necessarily select the candidate whose ideas they agree with, they choose the one who feels somewhat like them. Personality becomes a proxy for trust, shared experience, and even moral alignment. The American Enterprise Institute (AEI) believes one can view this shift through different lenses. On one hand, it may mark a healthy skepticism toward professional politicians who have grown complacent and transactional. On the other, it raises real concerns about how thin our criteria for leadership have become. When feelings or “vibes” outweigh experience and achievement, the result may be governance that is rhetorically compelling but practically incoherent. We’ve all experienced this in our daily lives; in everyday political discussions, whether it be about President Trump, former President Biden, former Vice President Harris, Hillary Clinton, or any array of state and local politicians, how often do we engage in deep debates about policy alternatives? I would hazard, rarely. Which brings us to the case of New York City’s Democratic Mayoral primary. When I asked about the winner’s socialist bent, a New Yorker I spoke with recently told me that few cared about Zohran Mamdani’s policy positions. They weren’t voting for that; they were voting for someone who seemed to share their emotions, frustrations, and sense of urgency. The local New York race demonstrates the risk for politics nationwide—we now find ourselves in a position where presence trumps substance, charisma outweighs competence, and the line between community organizer and policy administrator has been blurred beyond recognition. Yes, personality-driven politics feels good, but the danger is that it can lead to shallow policymaking and political instability. The need is for leaders who resonate emotionally, but also understand policy, institutions, and how to make government work.
Thought Leadership from our Consultants, Think Tanks, and Trade Associations
Conference Board Observes a Whiff of Stagflation in the May PCE. Consumer spending shrank and inflation rose in May, not a favorable combination for the Fed, as they continue to watch economic data before they meet at the end of July. The data suggests the recent decline in consumer confidence is spreading into consumer actions. Consider that:
- Rising inflation will limit how much consumers will be able to spend on goods and services in H2, leading to significant deceleration in economic growth this year.
- A pullback from spending on tariff-affected goods will weigh on consumer spending for the remainder of the year.
- The sharp drop in personal income growth in May (0.4%) was a reversal from an outsized increase in April, although wages and salaries continued to increase at a solid pace, which may help consumers weather tariff price increases in H2, even as the economy is expected to slow.
- On a year-over-year basis, overall inflation increased to 2.3% in May from 2.2% prior, and to 2.7% from 2.6% prior for the core. A pick-up in tariff-affected goods prices amid a broader weakening in discretionary services inflation is expected going into the summer months.
- Consumer spending is slowing. With two months of data in hand, real personal consumption expenditures grew at a 1.5%, half the pace of growth in 2024.
Barring de-anchoring of longer-term inflation expectations, it is anticipated that the negative impact on growth will likely overwhelm the impact of higher inflation, resulting in the Fed reducing policy rates later in H2 2025.
Eurasia Group Believes Mamdani’s Victory Suggests Democratic Party is Primed for Disruption. New York state assemblyman Mamdani’s victory over former governor Cuomo in the Democratic mayoral primary has three major implications for the future of the Democratic party in the run-up to the midterm elections. First, the Democratic establishment is weak, creating opportunities for upstarts. Cuomo’s endorsements from party grandees like former president Clinton and Rep. Clyburn (D-SC) were ineffective, whereas Mamdani rose from obscurity without any establishment connections. Second, Mamdani amassed support through his emphasis on housing affordability and pocketbook issues—rather than orienting himself in opposition to Trump, as Cuomo did—likely inspiring other Democratic primary challengers to pick up on these themes in their 2026 midterm campaigns. Third, Mamdani’s tactics featured a heavy reliance on social media and “digital-native” advertising, in contrast to traditional TV spots or earned-media appearances. Candidates who can master these forms are likely to be more successful in midterm primaries. With the national Democratic Party functionally leaderless and historically unpopular, there is ample space for candidates pitching themselves as disruptors. Mamdani’s online prominence and location in the massive New York media market will likely make him a key figure in this disruption, inspiring imitators across the country and striking fear into the heart of centrist Democrats who recognize the toxicity of the socialist brand nationally. Other figures to watch include activist David Hogg, who wields an impressively funded super PAC and has vowed to fund primary challenges to “ineffective” Democratic incumbents in safe seats, and Rep. Alexandria Ocasio-Cortez (D-NY), whose nationwide tour with Senator Sanders (I-VT) has attracted crowds of tens of thousands in recent months. Left-wing populism is likely to be a theme of U.S. politics in the coming years.
Observatory Group Thinks Trump-Xi Summit Would Likely Extend Trade Truce into the Fall. Beijing and Washington both announced the signing of a trade framework (what President Trump called “a deal”), which previously had been agreed to with a handshake in London. Even though the details remain unknown, both sides confirmed the easing of China’s rare earth exports controls in return for the U.S. lifting its restrictions on hi-tech exports and switching course on Chinese student visas. This trade truce will likely be extended beyond the 90-day-ceasefire, which expires on August 10th, because the two sides have agreed to prepare for a summit between Trump and Xi in the fall. Such a meeting could happen in one of three scenarios: (1) Mid-September: Xi may invite Trump for a state visit to Beijing around September 10th; (2) Late September: Xi and Trump could meet in New York on the sidelines of the 2025 United Nations General Assembly (UNGA), during the week of September 22nd; or (3) Early November: Trump could make an extra stop in Beijing after attending the APEC summit in South Korea, which takes place October 31st-November 1st. Although this détente is inherently fragile and could easily unravel over unaddressed structural issues or new security concerns, analysts are confident both sides have strong incentives to avoid re-escalation, at least before they can meet in person this fall.
“Inside Baseball”
Trade Analyst Laura Chasen Says Deals Not in Hand as Deadline Approaches. There’s less than a week to go before President Trump’s “reciprocal tariffs” are set to be placed on countries that haven’t reached a tariff deal with the U.S.; the 57 countries that the president assigned rates above the 10% baseline include most of the U.S.’s major trading partners. The deadline doesn’t apply to just two—the UK and China, which have reached preliminary agreements. The White House has now promised to send a letter to every country telling them what they must pay to do business in the U.S. Although President Trump has promised such “letters” before, with the 7/9 deadline looming, it is has become more likely that he’ll be informing countries of the new tariff rates he will be imposing on them. While nothing is assured, there are reasons to expect the deadline will be extended, at least for some countries. In fact, Treasury Secretary Bessent said talks with key countries could be completed by 9/1, implying another 90-day extension, and White House Council of Economic Advisers Chair Miran also suggested that the deadline could be rolled back. While it remains possible that a few deals might be unveiled before the deadline, it isn’t clear that any of the talks are near a conclusion. Certainly, talks with Japan and the EU aren’t close to an end; talks with India, long said to be far along, have run into problems; and trade relations with Canada are on a sudden downward spiral. Where do things stand broadly? The 10 countries identified as priorities are Japan, EU, India, Vietnam, South Korea, Thailand, Malaysia, Switzerland, Canada, and Mexico. Secretary Lutnick suggested that deals, probably preliminary deals, might be reached with these 10 by the deadline, but added that countries will be sorted into the “proper buckets” on 7/9. Those in one bucket—those that haven’t been actively negotiating—will get letters dictating the terms of their future trade relationship with the U.S.; those in another bucket will get a deadline extension, presumably to 9/1. Although each country has its own issues, there are some common obstacles to concluding deals. From the White House’s standpoint, there is significant pressure not to concede much on tariff levels (reciprocal and sectoral) because projected revenue from those tariffs over the next 10 years has been figured into the scoring of the reconciliation bill. If that revenue must be discounted due to lower tariff levels, it may undercut the bill’s chances in the House. From the standpoint of other countries, many do not want to rush into a deal if there’s a possibility that the reciprocal tariffs might be ruled illegal by the courts. And even more immediately, they don’t want to rush into a deal if they would still be vulnerable to future Trump tariff whims. In turn, some, led by India and Japan, are demanding that any deal include a guarantee that they will be exempt from future new tariffs—both to country-specific tariffs and tariffs on new products as a result of Section 232 investigations. While there is no indication that the administration will agree to this demand, one thing that seems most countries have accepted is that even the best deal won’t do away with all the tariffs. In a best-case scenario, a country will be left with certain sectoral tariffs and Trump’s “baseline” tariff of 10%.
In Other Words
“In effect, we went on hold when we saw the size of the tariffs and essentially all inflation forecasts for the United States went up materially as a consequence of the tariffs,” Federal Reserve Chair Powell.
Did You Know
To celebrate Independence Day and the U.S.’s founding, in a tradition known as “Let Freedom Ring,” the Liberty Bell, located in Independence Hall, Philadelphia, PA, is tapped 13 times to honor the 13 original states. Descendants of the signers of the Declaration of Independence tap the bell at 2:00 PM Eastern Time; because of its crack, the bell is no longer rung. Bells across the nation also ring 13 times at the same hour.
Graphs of the Week
Just over a third of Democrats say they’re very proud to be American, a sharp fall from the previous year, when Joe Biden was president. New data released ahead of the Fourth of July holiday show that just 36% of Democrats report being “very” or “extremely” proud to be an American, down from 62% in 2024. That’s the lowest point recorded in the history of asking the question, a reflection of the nation’s political divide. Historically, Democrats exhibit weaker national pride than Republicans, 92% of whom said they are very or extremely proud to be an American this year up from 85% in 2024.
