It's not just the economy

The increase in employment , income, and social benefits in the first two years of the current administration repeat the pattern of President Lula's first term, from 2002 to 2006, but the surprising discrepancy between the results presented and the low approval ratings of the current administration seems to throw out the old maxim " It's the economy, stupid ." The subject of countless studies in Brazil and the rest of the world, the economic vote is the one that consecrates, at the ballot box, politicians who have taken concrete measures to promote economic growth and the well-being of the population, especially the poorest.

If this real and tangible effect was not perceived by the main beneficiaries and if, in the same period, the approval of the government and the president fell, this was due, among other factors, to a double political and ideological siege, driven by the interests of rentierism and agribusiness managed by Congress and the market, with the support of the media, assesses economist Waldir Quadros, retired professor from the Institute of Economics at Unicamp and researcher at the Center for Trade Union Studies and Labor Economics, in a study on the first two years of the current government.

The recent recovery of President Lula's popularity , with the decisive contribution of Donald Trump's attacks on national sovereignty, the evidence of Bolsonarism's anti-national participation in the escalation and the strong reaction from society, tends to reduce, according to Quadros, the gap between the beneficial effect of the government's public policies in reducing inequality and increasing mobility and their perception by the population.

There was an increase in all levels of the middle class and the total number of people living in poverty fell by 33%.

In addition to rising employment and income during the first two years of the current administration, there were advances in social mobility and an increase in average household income, with an expansion of the middle classes and a reduction in extreme poverty. Lula's approval rating reached 54% in his first term, soared to 87% in his second, and, under the current administration, rose from 39.8% in June to 42.9% in August.

Based on the IBGE's Continuous PNAD (Non-Independent Household Sample Survey), Quadros's study shows that, between 2022 and 2024, the "upper middle class" grew 26.7%, from 19.1 million to 24.2 million individuals, and the "middle middle class" grew 17.9%, from 32.8 million to 38.6 million. In the same period, the contingent classified as "poor" fell 33%, from 19.3 million to 12.9 million. In relative terms, the country's upper middle class reached 11.2% last year, up from 8.8% in 2022. The middle middle class, which represented 15.1% of the total in the first year of the current administration, increased to 17.8%. The working class, in the same period, decreased from 25.8% to 24.4%, and the poorest, from 8.9% to 6%. The average total family income, in turn, increased 14.3%, from R$5,416 to R$6,190.

The regional breakdown confirms the improving trend, with growth in average household income in all macro-regions. The growth of the upper middle class was most intense in the South (+41.9%) and Northeast (+34.1%), followed by the Southeast (+26.7%) and Central-West (+23.0%). In the North, growth was 11.9%. Note: the average middle class increased above the national median in all regions except the Southeast. The reduction in the group living in poverty was widespread, with emphasis on the North (-40.8%), followed by the South (-31.1%), Northeast (-32.6%), Central-West (-30%), and Southeast (-26%).

Social strata were not established based on merely statistical criteria or their declared income, the economist emphasizes, but rather through an approach closer to the sociology of occupations. "In short, we sought to define the income ranges declared to the PNAD that captured the occupations considered typical of each stratum, starting with the most well-off." Inspired by the criteria adopted by the famous American sociologist Wright Mills, author of the classic "The Power Elite ," Quadros considered college-educated professionals, such as doctors, engineers, university professors, and small and medium-sized business owners, to represent the upper middle class.

The middle class included professionals such as managers, high school teachers, supervisors, and specialized technicians. The intermediate poor, or lower middle class, included elementary school teachers, nursing assistants, and office assistants. The poor were defined as those who, in January 2004, when the methodology was completed, earned less than the minimum wage, the constitutional minimum wage. The poor, in the study, are those situated between the last two aforementioned strata.

Quadros considers in the study the weight of immediate well-being factors, such as crime and food prices, which keep the cost of living high and suppress expectations. "It was natural, we didn't even question it, the social structure improved, the government was doing well in the public's opinion. Now, in the last two years, things have gone out of whack. It's an apparent paradox, isn't it?"

Dream opponents. The pro-Bolsonaro opposition, associated with Trump, threw an electoral banner into Lula's lap – Image: Marcelo Camargo/Agência Brasil and Edilson Rodrigues/Agência Senado

The economist has been working with the database and methodology that have supported his study for over 20 years, and for the first time, he has recorded this disconnect. Typically, when there is an improvement in social mobility, the government's recognition increases, popularity rises, and approval ratings follow suit. Conversely, when the situation is one of downward social mobility, popularity and approval ratings decline. "What's happening now is a new phenomenon, in my view. The social conditions seen through social mobility—that is, whether individuals are improving their positions in the social structure—are at a very good point in these two years, compared to the previous period, but this has not been reflected in government approval."

The path chosen to decipher the enigma was to investigate beyond the social structure. "It was necessary to advance in the fields of politics and ideology; the answer wasn't in the social structure. There's also this constant, daily media war. It's a real pain," the researcher emphasizes. A relevant fact, Quadros continues, is the anti-PT sentiment, which is very strong in society. In previous PT governments, public policies geared to the interests of the majority of the population yielded political dividends. There was development and economic growth during the Lula I and Lula II administrations. It wasn't just social policy, which was crucial, however, because it reached the lower income groups.

An objective examination of the economic data from the current administration's first two years shows that everything is fine. "But that's not the case. There's been an increase in food inflation, which is hitting the poorest hardest, and there's also a deterioration in public services," emphasizes the Unicamp professor. "People are tired of waiting. It's going to take time to improve mobility. Everything is falling apart. For those who depend on buses, it's a tragedy."

Trump's harassment has been beneficial to the government's image

The problem is that rising incomes increase demand for transportation and other services, and the lack of public investment to increase service capacity highlights the policy's severe limitations. Insufficient public investment, as we know, is one of the most damaging results of the financial system's imposition of fiscal austerity dogma on the government. The same impasse is repeated in the areas of health and education, which depend on public investment. "Obviously, the people had great expectations that with Lula's arrival, the situation would improve, or resolve everything. But the conditions weren't there. And there's a great deal of disappointment."

Agribusiness, finance, and the media are interested in "a weak government, incapable of escaping its stranglehold," the author of the work states. In this situation, there are insufficient resources to develop the country, implementing reindustrialization on contemporary foundations and profoundly restructuring public policies in health, education, transportation, security, housing, and sanitation, which are suffering from the accumulation of enormous deficiencies. In 2024, the government spent 950 billion reais on debt interest payments, but only 216 billion reais on health care and 111 billion reais on education. Crime continues to be rampant, and there are still high food prices and the rising cost of living in general. "In other words, living conditions, which were already not good at the beginning of this administration, have not improved as much as expected and needed. Expectations have not been met, hence the great frustration."

The right capitalized on these limitations, but now Lula "has taken advantage of Trump's attacks and is growing. Note, growing for reasons beyond the social structure," the economist continues. At this moment, the president's coherence and clarity stand out, both in relation to his commitment to the BRICS and in his defense of a multipolar world.

The United States, relentless in defending its interests, isn't the only relevant actor. There's also China, and Trump's decisions are accelerating the deterioration of the U.S. position. Meanwhile, the Chinese are "eating around the edges."

In the game of new geopolitics, Lula shows aplomb in the face of US threats, contrary to what the media insists he presents. Before Trump's meeting with Russian President Vladimir Putin in Alaska, Lula called Narendra Modi, the Prime Minister of India, and Xi Jinping, the President of China. Putin called Lula before and after meeting with the US president. The liaison between the leaders of the largest BRICS countries is part of the resistance to the ongoing attacks launched by the new "emperor."

Published in issue no. 1377 of CartaCapital , on September 3, 2025.

This text appears in the print edition of CartaCapital under the title 'It's not just the economy'