This November’s presidential election ought to be a doddle for Joe Biden. Fears of recession have receded. More Americans have jobs than ever before. Inflation is on a downward trend. Interest rates will be cut soon. The US economy is comfortably the fastest growing in the G7 group of leading industrial nations. Share prices are at a record high. It is the sort of record Rishi Sunak would die for. Yet here’s a strange thing. As the prospects for the economy have brightened over the past 12 months or so, Biden’s approval ratings have steadily fallen – from 53% to just under 40%. The polls suggest Donald Trump – who won the support of Republicans in the New Hampshire primary – is on course to return to the White House. When he was advising Bill Clinton during the 1992 presidential race, James Carville famously said: “It’s the economy, stupid” – and back then it was. The then sitting president, George Bush Sr, was struggling because the US had been in a mild recession on his watch and he had raised taxes after promising not to do so. But there has been no recession under Biden. By almost every yardstick, the US economy is in pretty good shape, yet Americans don’t seem in the least bit grateful to their president. It is too early to write off Biden. He is only just behind Trump in the national opinion polls, and the incumbency factor should give him a boost as election day approaches. As things stand, a Biden-Trump race (assuming that is the eventual contest) looks like it will be a lot closer than the one between Rishi Sunak and Keir Starmer. Even so, Biden is clearly struggling to get his message across and it is worth exploring why that is. One obvious explanation is that the US, like just about every other developed country, has been through a cost of living crisis that has resulted in sharply higher interest rates from its central bank, the Federal Reserve. The US was less exposed than western Europe to the higher energy prices prompted by Russia’s invasion of Ukraine, but it still cost a lot more for motorists to fill up their tanks. Food prices also rose sharply, as did the cost of a mortgage. The upshot of all that was that Americans felt they personally were worse off last year. Even though the economy was growing, it didn’t feel like that to individuals paying more for life’s basics. The US annual inflation rate peaked in the summer of 2022 at 9.1% and – despite the odd bump in the road – has been falling ever since. It currently stands at 3.4%, prompting speculation on Wall Street that the Fed will start to cut interest rates in the spring. Falling inflation has started to affect consumer confidence. Voters are starting to feel more upbeat about the direction of the economy and, while that has yet to translate into a more favourable opinion of the president, Biden will be hopeful that he will reap a political benefit. But he may not. Perception matters, and the perception many Americans have is that inflation is rising not falling and they are becoming worse off when the opposite is true. Negative feelings about the economy are much more pronounced among Republicans than Democrats, which suggests that views about the economy are being formed by non-economic factors. If you think Biden is too old and unfit to be president, then how can the economy possibly be doing well? Britain’s election looks like it will take place around the same time the US will be deciding who should be its president, and there are lessons for both Sunak and Starmer from Biden’s travails. Of the two, the prime minister clearly has the bigger and more urgent problem. While a lot can happen between now and the autumn – the most likely date for a UK general election – Sunak is much further behind in the polls than Biden and has a much less impressive economic record to put to voters. To take one obvious example, in the third quarter of 2023 – the latest period for which data is available – the US economy grew at an annual rate of just over 5%. The UK economy contracted. According to official figures, things are starting to improve. As in the US, UK inflation is well below its peak of 11.1% and currently stands at 4%. Wages are rising faster than prices, which means living standards for the country as a whole are on the up. For the first time in two years, the spending power of households has increased. Yet unless there is a wholly improbable boom between now and polling day, the average Briton will be worse off at the end of this parliament than they were at its commencement. If Biden is struggling to be re-elected, imagine how much more difficult it will be for Sunak. The state of the economy currently tops the list of voter concerns in the UK, but they are also worried about other things – such as the NHS, migration and housing. Taxes might be at their highest level since the 1940s, but looking at the shabby state of the public realm voters don’t think they are getting enough for their money. And that’s the lesson for Starmer. His pitch to the electorate is that Labour under his premiership will increase the economy’s growth rate, freeing up resources and obviating the necessity for tough choices on tax. But even if he pulls off this devilishly difficult trick, the message from the other side of the Atlantic is that growth on its own is not enough. Larry Elliott is the Guardian’s economics editor