A big focus area for me in my day job as dean of the business school is to prepare our students for leadership in the market. This includes a large focus on entrepreneurship and innovation. One of the key lessons we push early on is the idea of listening to the market, following Eric Reis’s The Lean Startup. Reis outlines that the real secret of entrepreneurship is to go faster than competitors to learn what the customer really wants, what Reis calls validated learning. The world is littered with entrepreneurs that fail, not because they don’t have a great idea or a great product, but that there is little market fit. In other words, they solve a problem that they truly care about, which is almost always a real problem, but it is not a problem that is salient to the broader market–they can’t get market traction. If they don’t pivot, they inevitably fail. The question for the entrepreneur in the face of early struggles is whether to pivot or to persevere.

It’s not really that much different for political entrepreneurs. They need to respond to what the customer (voter) really cares about. And despite what the Trumpians say, the important thing is not that Mr. Trump keep every single one of his myriad promises, but that he keep a singular focus on the really big ones that a large majority care about. There is no doubt the very most important promise Mr. Trump made was to bring prices down very quickly. Yes he promised to raise tariffs, and there is some portion of his constituency which likes that, but tariffs have never been popular with the broader population as we related once again last week. Mr. Trump had no mandate at all to fundamentally restructure the American economy, nor to arrogate to the presidency the power to upend the world economy. His mandate was to lower prices, stop the progressive insanity and get control of immigration immediately. And like failed entrepreneurs in the marketplace, Mr. Trump continues to sell his vision of the future, which is a product very few American citizens want to buy.

Affordability is not going away any time soon. The WSJ this week had an article with a title that ought to startle every Republican politician: The Middle Class Is Buckling Under Almost Five Years of Persistent Inflation. This article encapsulates what much additional data has been telling us for quite some time–we have a two-tier economy that looks good in some statistical aggregates (e.g., market indices) but is very bifurcated. Very wealthy households are doing pretty well; stock market wealth is enabling them to continue and even increase consumption. For example, the August consumer spending #s were up sharply, which on the surface appears good, but most of that increase was spending by upper income households. As the WSJ relates:

America’s middle class is weary. After nearly five years of high prices, many middle-class earners thought life would be more affordable by now. Costs for goods and services are 25% above where they were in 2020. Even though the inflation rate is below its recent 2022 high, certain essentials like coffee, ground beef and car repairs are up markedly this year. “Life felt more doable a year and a half ago,” said Holly Frew, a college communications director with a household income around $135,000 living in Atlanta. “I need to know where the light is at the end of the tunnel.”

The frugality of the middle-class customer figures as a recurring theme in recent corporate earnings reports. Fast-food restaurant Wingstop said this month that middle-income diners have now joined lower-income ones in dialing back purchases. Target reported slumping sales and said customers are spending cautiously on discretionary items such as home decor and apparel. Walmart, meanwhile, posted strong sales as consumers from all income groups flocked to the retailer’s value.

The University of Michigan’s consumer sentiment survey showed that 44% of middle-income respondents said their financial situation was worse than it was a year ago, while 23% said it was better, based on a three-month average ending in September. Those who feel worse off overwhelmingly said it was because of higher prices. Their gloomy outlook was in contrast with the most affluent families, who are enjoying stock-market gains and powering the economy with their spending. Many in the middle class also have stock investments and retirement funds, but they are more apt to feel pinched, and resentful of rising costs of everything from the price of a steak to a new couch. “People feel like their living standards are falling behind,” said Stefanie Stantcheva, a Harvard economics professor who has studied the psychology of inflation. Her research has found the sentiment about rising prices is more pronounced among lower earners.

44% of middle-income respondents said their financial condition was worse than last year. That means worse than under Joe Biden. Mr. Trump, this is not a time to perservere; this is a time to pivot quickly and completely. And that means give up your trade war. Like all wars, both sides lose. And you promised only winning to the American people. We’re tire of losing, but we are heading to more losing next fall unless you turn this issue around quickly.

PS: There is only one path towards a more affordable economy, that means the production of more goods and services in the private sector. We need more resource inputs (e.g., labor and capital) devoted to producing more output, with the most efficiency possible. That’s why the tariffs are part (but only part) of the problem–Mr. Trump is trying to swap from more efficient production to less efficient production. That can only increase prices. Every. Single. Time.