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Every four years the American presidential primaries roll around to remind Americans how weak, clumsy and negative their major political parties have become. The news media’s red-and-blue maps, the repetitive partisan standoffs in Congress and the drama created by the polarisation of the parties create the impression that they hold tremendous sway, that Americans are devoted to either the Democrats or Republicans and obsessed with their prospects. The reality is more muddled and dispiriting.
The largest, and growing, share of Americans choose not to identify with either party. According to a Gallup poll released this month, 43% call themselves independent, tying a record set in 2014. In Gallup’s poll, the proportion of eligible voters identifying as Democrat has fallen to a record low, 27%, the same percentage that call themselves Republican. Another Gallup poll, also this month, found that only 28% of adults, also a new low, were satisfied with “the way democracy is working in this country”.
Yet the parties are not reacting by making themselves more appealing. Something is interfering with the signals the electorate sends to the organisations that supply candidates and ideas, never more so than this cycle, when most Americans have consistently turned their noses up at the products most likely to be on offer, President Joe Biden and former President Donald Trump.
“The first party to retire its 80-year-old candidate is going to be the party that wins this election,” declared Nikki Haley, a former governor of South Carolina, as she conceded the New Hampshire primary to Mr Trump on January 23rd. She may be right in theory. But she is wrong in practice that there is some coherent entity called a “party” capable of such a rational calculation. As Mr Trump demonstrated in 2016, and Barack Obama did before him, political parties do not plot or strategise anymore to anoint a candidate, at least not with much effect; they have instead become vehicles idling by the curbs of American life until the primaries approach, waiting for successful candidates to commandeer them.
For most of American history, party leaders picked presidential nominees. That system collapsed after the fractious Democratic convention of 1968, in which party elders ignored the candidate of the anti-Vietnam-war left and instead bestowed the nomination on Vice-President Hubert Humphrey, who had not competed in a single primary. Reformers successfully argued that nominating delegates should be picked by voters in primaries instead, and Republicans eventually followed the Democrats’ lead. This approach opened up the system to candidates, such as Jimmy Carter in 1976 and Ronald Reagan in 1980, who might never have been chosen in a smoke-filled room.
But in taking power from the party establishment, reformers unintentionally handed it to activists, who tend to be more extreme than other partisans, let alone the rest of the country. This is particularly true of the Republican Party. Now, relatively small numbers of impassioned voters can end up choosing nominees.
After Mr Trump won 51% of the vote in the Iowa caucuses this month, he was credited in the news media with a “landslide” win and a “blowout victory”. But it was a frigid night, and fewer than one in six registered Republicans turned out. They were probably among the most motivated of voters, quite unlike most Americans. Mr Trump won about 56,000 of these Republicans, or about 7% of the potential pool of 752,000 Iowa Republicans.
In New Hampshire on January 23rd Mr Trump won most Republicans who turned out, while Ms Haley won most “undeclared”, or independent voters who did so. Political analysts rightly saw this as a weakness of Ms Haley, because in many states independent voters cannot cast ballots in partisan primaries. And it might seem reasonable that the Republicans would want to nominate whoever wins the most Republicans. The flaw in this approach is that, definitionally, that candidate has demonstrated only that they can win if the electorate is Republican. A party capable of organising itself to win a general election with a big majority would place more value on reaching beyond the base.
A party’s nominee may not win the majority even of its primary voters, let alone of its eligible primary voters. The primaries tend to exaggerate the popularity of the eventual nominee because many states award all their delegates to the winner, rather than dividing them proportionately among the candidates. In 2016 Mr Trump won fewer than 45% of primary voters in all—that is, he won the Trumpy minority of the activist minority that turned out.
This is a fragile basis on which to stake a claim to nationwide electability. Nominees overcome that handicap by relying on what political scientists call “negative partisanship”. Though the plurality of Americans call themselves independent, they tend to lean to one party or another. Encouraging these voters, as well as less politically active party members, to see the opposing party as demonic is a reliable means of getting them to vote your way.
Third parties are hard
All this helps explain the longing of certain idealists and opportunists for a third party. That yen is particularly sharp in this cycle. History suggests it could be fulfilled quite suddenly, says Bernard Tamas, a political scientist at Valdosta State University and the author of “The Demise and Rebirth of American Third Parties”. “It’s often at times like this when the two major parties are polarised, because it opens a door for a third party to attack,” he says. “You don’t know if it’s going to happen until it happens.”
But the group No Labels, which is considering a third-party bid, appears to be off to a poor start. Successful third parties have tended to run candidates not just for president but down the ballot, too, and to have specific, galvanising issues. Had Donald Trump been capable of organising such an effort, he might have been a powerful third-party candidate. But why bother, when an existing party was just sitting there waiting to be commandeered? ■
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Andersen Ross Photography Inc | Digitalvision | Getty Images
Wall Street is warning that the U.S. Department of Education’s crack down on student loan repayments may take billions of dollars out of consumers’ pockets and hit low income Americans particularly hard.
The department has restarted collections on defaulted student loans under President Donald Trump this month. For first time in around five years, borrowers who haven’t kept up with their bills could see their wages taken or face other punishments.
Using a range of interest rates and lengths of repayment plans, JPMorgan estimated that disposable personal income could be collectively cut by between $3.1 billion and $8.5 billion every month due to collections, according to Murat Tasci, senior U.S. economist at the bank and a Cleveland Federal Reserve alum.
If that all surfaced in one quarter, collections on defaulted and seriously delinquent loans alone would slash between 0.7% and 1.8% from disposable personal income year-over-year, he said.
This policy change may strain consumers who are already stressed out by Trump’s tariff plan and high prices from years of runaway inflation. These factors can help explain why closely followed consumer sentiment data compiled by the University of Michigan has been hitting some of its lowest levels in its seven-decade history in the past two months.
“You have a number of these pressure points rising,” said Jeffrey Roach, chief economist at LPL Financial. “Perhaps in aggregate, it’s enough to quash some of these spending numbers.”
Bank of America said this push to collect could particularly weigh on groups that are on more precarious financial footing. “We believe resumption of student loan payments will have knock-on effects on broader consumer finances, most especially for the subprime consumer segment,” Bank of America analyst Mihir Bhatia wrote to clients.
Economic impact
Student loans account for just 9% of all outstanding consumer debt, according to Bank of America. But when excluding mortgages, that share shoots up to 30%.
Total outstanding student loan debt sat at $1.6 trillion at the end of March, an increase of half a trillion dollars in the last decade.
The New York Fed estimates that nearly one of every four borrowers required to make payments are currently behind. When the federal government began reporting loans as delinquent in the first quarter of this year, the share of debt holders in this boat jumped up to 8% from around 0.5% in the prior three-month period.
To be sure, delinquency is not the same thing as default. Delinquency refers to any loan with a past-due payment, while defaulting is more specific and tied to not making a delayed payment with a period of time set by the provider. The latter is considered more serious and carries consequences such as wage garnishment. If seriously delinquent borrowers also defaulted, JPMorgan projected that almost 25% of all student loans would be in the latter category.
JPMorgan’s Tasci pointed out that not all borrowers have wages or Social Security earnings to take, which can mitigate the firm’s total estimates. Some borrowers may resume payments with collections beginning, though Tasci noted that would likely also eat into discretionary spending.
Trump’s promise to reduce taxes on overtime and tips, if successful, could also help erase some effects of wage garnishment on poorer Americans.
Still, the expected hit to discretionary income is worrisome as Wall Street wonders if the economy can skirt a recession. Much hope has been placed on the ability of consumers to keep spending even if higher tariffs push product prices higher or if the labor market weakens.
LPL’s Roach sees this as less of an issue. He said the postpandemic economy has largely been propped up by high-income earners, who have done the bulk of the spending. This means the tide-change for student loan holders may not hurt the macroeconomic picture too much, he said.
“It’s hard to say if there’s a consensus view on this yet,” Roach said. “But I would say the student loan story is not as important as perhaps some of the other stories, just because those who hold student loans are not necessarily the drivers of the overall economy.”
A woman walks in an aisle of a Walmart supermarket in Houston, Texas, on May 15, 2025.
Ronaldo Schemidt | Afp | Getty Images
U.S. consumers are becoming increasingly worried that tariffs will lead to higher inflation, according to a University of Michigan survey released Friday.
The index of consumer sentiment dropped to 50.8, down from 52.2 in April, in the preliminary reading for May. That is the second-lowest reading on record, behind June 2022.
The outlook for price changes also moved in the wrong direction. Year-ahead inflation expectations rose to 7.3% from 6.5% last month, while long-term inflation expectations ticked up to 4.6% from 4.4%.
However, the majority of the survey was completed before the U.S. and China announced a 90-day pause on most tariffs between the two countries. The trade situation appears to be a key factor weighing on consumer sentiment.
“Tariffs were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April; uncertainty over trade policy continues to dominate consumers’ thinking about the economy,” Surveys of Consumers director Joanne Hsu said in the release.
Inflation expectations are closely watched by investors and policymakers. Federal Reserve Chair Jerome Powell has said the central bank wants to make sure long-term inflation expectations do not rise because of tariffs before resuming rate cuts.
A final consumer sentiment index for the month is slated to be released on May 30, and will likely be closely watched to see if the tariff pause led to an improvement in sentiment.
This is breaking news. Please refresh for updates.
Jamie Dimon, chief executive officer of JPMorgan Chase & Co., speaks during the 2025 National Retirement Summit in Washington, DC, US, on Wednesday, March 12, 2025.
Al Drago | Bloomberg | Getty Images
Wall Street titan Jamie Dimon said Thursday that a recession is still a serious possibility for the United States, even after the recent rollback of tariffs on China.
“If there’s a recession, I don’t know how big it will be or how long it will last. Hopefully we’ll avoid it, but I wouldn’t take it off the table at this point,” the JPMorgan Chase CEO said in an interview with Bloomberg Television.
Specifically, Dimon said he would defer to his bank’s economists, who put recession odds at close to a toss-up. Michael Feroli, the firm’s chief U.S. economist, said in a note to clients on Tuesday that the recession outlook is “still elevated, but now below 50%.”
Dimon’s comments come less than a week after the U.S. and China announced that they were sharply reducing tariffs on one another for 90 days. The U.S. has also implemented a 90-day pause for many tariffs on other nations.
Thursday’s comments mark a change for Dimon, who said last month before the China truce that a recession was likely.
He also said there is still “uncertainty” on the tariff front but the pauses are a positive for the economy and market.
“I think the right thing to do is to back off some of that stuff and engage in conversation,” Dimon said.
However, even with the tariff pauses, the import taxes on goods entering the United States are now sharply higher than they were last year and could cause economic damage, according to Dimon.
“Even at this level, you see people holding back on investment and thinking through what they want to do,” Dimon said.