- Economist Betsey Stevenson said Democrats have gained voters' trust on economic issues — an area where Republicans have traditionally held an advantage.
- Stevenson said newly elected Democrats should focus on affordability, tariffs, and health care costs rather than getting distracted by efforts to hold the Trump administration accountable.
- AI investment has helped drive overall economic growth, but Stevenson questioned whether that growth is creating enough jobs or raising wages for everyday Americans.
- Attracting innovative companies and long-term employment opportunities could be more valuable than the temporary construction jobs associated with new data centers, Stevenson said.
Democrats won major victories in Michigan and across the country in Tuesday's midterm election.
In Michigan, voters elected Jocelyn Benson as governor and Abdul El-Sayed to the U.S. Senate, while Democrats secured majorities in both chambers of the state Legislature.
But with affordability and the economy among voters' top concerns, what will Democrats need to do to deliver on their campaign promises?
Betsey Stevenson, a professor of public policy and economics at the University of Michigan's Ford School, joined Stateside to discuss what the election results reveal about voters' economic priorities and what they could mean for Michigan's future.
Stevenson said one of the biggest developments is a shift in which political party Americans trust to manage the economy.
For decades, she said, Republicans maintained an advantage on economic issues, even when their policies weren't necessarily producing better outcomes. But recent surveys have shown a growing belief that Democrats can do a better job.
"That was a really tough nut for Democrats to crack," Stevenson said.
Now, she argued, Democrats need to demonstrate that they can address the economic concerns that helped bring them into office.
Stevenson said newly elected lawmakers should prioritize measures aimed at reducing costs for consumers, including rolling back tariffs, and restoring Affordable Care Act subsidies. She also pointed to the economic impact of the war in Iran and its effect on oil prices.
While voters may also want greater accountability from the Trump administration, Stevenson cautioned that Democrats risk losing sight of the issues that helped them win.
Another major economic question is the rapid expansion of artificial intelligence and the data centers needed to support it. Investment in AI has helped fuel economic growth, Stevenson said, but that growth hasn't necessarily translated into more jobs or higher wages for American workers.
Although constructing data centers can create jobs in the short term, Stevenson said the facilities provide relatively few permanent positions once completed. Instead, she suggested Michigan should focus on attracting companies and industries capable of sustaining employment for decades.
"You know what some of those San Francisco companies should do? They should relocate to Detroit," Stevenson said.
With new leadership preparing to take office in Lansing and Washington, Stevenson said the challenge will be turning voters' demands for economic stability into policies that create lasting opportunities.
Scroll up to listen the full conversation, or read the transcript below:
April Baer: What a big flex the election was for the power of pocketbook issues this week, as voters in Michigan and elsewhere expressed a tsunami-sized wish for change. The stock market has been up and down like a yo-yo this week, with election-driven surges of investor confidence followed by losses for stocks that are tied to the build-out of AI data centers.
Also, what now? Will new Democratic leaders wish to rein in Trump's excesses, reach the factors that have made life less predictable and more expensive in Michigan?
With me now is Betsey Stevenson, a professor of public policy and economics at the University of Michigan's Ford School. She is also a former chief economist for the U.S. Department of Labor.
Betsey, welcome back to Stateside. Great to have you.
Betsey Stevenson: Great to talk with you.
AB: So, through an economic lens, what is your read on this? How much of the vote and the blue wave nationwide had to do with the economy and the way we all experience it?
BS: Well, you know, I want to start by pointing out that the Republicans, for decades, many, many decades, have had the upper hand with voters when it comes to trust over managing the economy. You ask people, who do you think is going to do a better job with the economy? And, you know, voters were more likely to say Republicans.
And frankly, that continued even when there wasn't really a lot of good economic evidence that Republicans were actually better for the economy. For many decades, you know, Republicans often did things that were harmful to the economy, but they still maintained a belief with voters.
And what happened was that belief has been cracked. And in fact, we saw that in survey data in 2026, when you started to see voters and Americans more generally saying that they think Democrats have an edge in handling the economy.
So that's the first step, was that they now believe Democrats will do better with the economy. And that was a really tough nut for Democrats to crack, to be able to convince voters that they could do it.
AB: We know that the agenda for many of the newly elected congressional reps and senators, Abdul El-Sayed, people like Sean McCann in the Michigan House delegation, they've talked a lot about trying to address some of these economic factors on the campaign trail.
But also, we know that there is a hunger among Dems in D.C. to try to rein in a president who's consistently pushed back on the boundaries of executive authority, maybe look at some of the leaders who are part of the Trump cabinet.
If you're newly elected, what problems would you say voters want to fix first from that economic standpoint?
BS: I think you are laying out that there's two things that voters are asking for. One is more accountability, and the other one is just basic pocketbook kitchen table issues. Like, are we, you know, can you bring prices down or at least slow the rate of increase of prices?
I think that's what they're asking for. The biggest risk Democrats have is they get distracted by the accountability and they go too far to trying to hold people accountable.
I think the first step, what I would do and what I recommend Democrats newly elected do, if you're elected on pocketbook issues, Congress has the power of the purse, and you need to take that back. And that means the first thing that any newly elected person should do when they're sworn in in early January is reassert Congress's power to tax and spend.
And by doing that, they can show that, first of all, Congress matters. Even if they've got Trump there ready to veto it, I think that voters will still reward Democrats if they're out there passing bills that say end the president's ability to impose tariffs. So they get rid of the tariffs. They're going to show that they are doing something to try to bring prices down.
If they do what they, you know, a very first step thing would be to put the subsidies back for the ACA. Americans have seen an enormous increase in the cost of health insurance, and that cost has come really from two direct things Republicans did: got rid of the subsidies and have had cuts to Medicaid. They can reverse those things immediately.
And then, of course, they need to try to check the president's war powers and see if they can bring the Iran war to, you know, a reasonable close so that we can get some stability in oil prices.
Those four things are really the immediate things that show that they're addressing pocketbook issues. And I think the risk is the distraction of there's so much corruption that they've been witnessing in D.C. But if you focus too much on that, you're not addressing the mandate the voters sent Democrats there to address their pocketbook issues.
AB: Betsey, when you think about the factors that affect inflation, is it enough to eliminate the tariffs? Is it enough to finish the war in Iran? Are these things that are going to move the needle in a way that the average person will feel?
BS: Well, you know, another thing that is driving up prices in the short run is the enormous demand for data centers and AI spending.
And voters also delivered quite a rebuke to data centers on Tuesday's election around the country.
And so slowing down and being more thoughtful about where we want data centers to go, how they're going to impact the community, and what's the responsibility of the companies that are going to be using those data centers to the communities that they're building them in, that slowing that down will bring, will also help slow the rate of price increases.
AB: So I got to tell you, I mentioned that the markets seem a bit nervous about what's, you know, what the election repercussions may be for AI.
I have been trying to think if I have ever experienced an election in which an emerging technology, in this case AI, has ever been so tied up in the politics of the moment and also at the center of so much market investment and exuberance.
Do you see any potential pitfalls for anyone who's trying to change course right now?
BS: I mean, there are pitfalls because this, you know, AI and AI enthusiasm has been propping up the economy.
If you look at, we've had this enormous GDP growth that's come from AI enthusiasm. But if we ask what that has meant for ordinary families, it hasn't meant that much because the job growth hasn't come from there.
If we look at where the job growth has been over the last year, it's basically from healthcare. We're not seeing this AI enthusiasm do much besides boost our GDP numbers in terms of it's not adding a lot of jobs, it's not raising people's wages.
All of that is to say that yes, we could risk slowing economic growth. But as long as it only slows a little, that's not so bad.
Could we push us into a recession? That, of course, is something that every politician has to be aware of and has to navigate. But I think no one's talking about ending AI or stopping AI. What we're talking about is slowing it down so it's a much more purposeful set of choices we're making.
And I think if you look at the mandate that Democrats have, one of their biggest swings was from young men, a bloc who had swung towards the Republicans and now swung back even harder towards the Democrats. And what these young men are saying is, "This world we're entering, it doesn't seem fair. It seems like wealth is being randomly distributed based on crypto or influencers or corruption. And I don't know what to do next. And I want someone who's going to help give us a little bit more security and reduce some of this uncertainty."
AB: Betsey, I want to take a minute to address something that is relevant to the big change in state leadership that we just got.
Michigan has had a Democratic governor for two terms and will continue to have one in the person of Jocelyn Benson.
And the legislature just went through this change with Democrats catching majorities in both the Michigan House and the Senate.
Typically, the state profile reacts to federal policy for sure, but also tax receipts right here in Michigan.
Is there anything, keeping in mind what you said about job growth and wages, is there anything we can say for sure about the outlook that Michigan's leaders will be dealing with by the time that these new crews swear in in January?
BS: I mean, you were right to point out that these things are just very connected with federal policy as well as with state policy.
You know, Michigan, we did just have Democrats take over, but it is a moderate state. It is a state that wants to see sensible policies that sort of play by the rules of people should be able to work hard and have a job that they trust that delivers an income.
The problem that the state has is that we're not 100% sure anymore how to achieve, you know, that promise in, you know, our modern era, right?
We saw a Trump administration throw a whole bunch of tariffs on, which should have helped our auto industry, but actually ended up hurting us because of the challenges with trade with Canada, the integration that we have. And so it's no longer a simple set of policies like, let's protect all the Michigan jobs, but we have to actually think sensibly about how we build not just jobs for the short run.
And I think that's what data centers are about. Data centers lure us into, okay, we'll get some jobs for the next few years as we build the data center, but there's no real jobs there after it's built.
So what we need to be thinking about is how do we bring in industry and how do we attract people who want to do the innovative kind of work that is going to continue to grow for decades.
You know, if you look at a place like San Francisco, it's a very expensive place to operate. You know what some of those San Francisco companies should do? They should relocate to Detroit. Detroit's been being revived. It's a great place to be.
And if we could bring some of those Palo Alto and Silicon Valley jobs to Detroit, that's the kind of job growth that could sustain us, not a data center.
AB: Betsey Stevenson is an economist at the Ford School at the University of Michigan. Betsey, thank you always for your time and your insights.
BS: It's great talking with you always.
