By Steve Schifferes
It has been a bad 24 hours for the Democrats. Not only have they lost the presidency - and by a bigger margin in the popular vote than expected - they have also lost several key Senate and House seats.
How can they reshape their image during their next four years in the political wilderness?
Democrats need to find issues to energise their core supporters
"I am here a little bit late and little bit short," Mr Kerry told his disappointed supporters on Wednesday.
For the Democratic candidate, it could be the epitaph for his campaign.
After a weaker than expected boost from his nominating convention, John Kerry made a major change in his campaign strategy in the first week in September.
That's when the senator from Massachusetts decided to come out fighting over the war in Iraq - bypassing his key advisers who wanted him to emphasise economic issues.
In retrospect, it may have been a crucial mistake.
Exit polls conducted for the Associated Press news agency and the US television networks show that the issue of Iraq was less important than the economy as a campaign issue.
Although both motivated Kerry supporters, raising Iraq also raised the spectre of terrorism - an issue on which voters trusted President Bush much more.
The president was rated more highly than Senator Kerry on leadership qualities such as "honest and trustworthy", a "strong leader", and "takes a clear stand on the issues".
Senator Kerry's perceived change of position on Iraq may have hurt him with some undecided voters, although it allowed him to mount an effective challenge to the president in the first televised debate.
But it also reflects the difficulty that any challenger faces in running against an incumbent during a war - when the president's role as commander-in-chief comes to the fore - despite Senator Kerry's attempt to portray himself as a military hero during the Democratic convention.
Senator Kerry is also widely believed to lack the personal charisma that helped Bill Clinton win the White House for the Democrats.
His most highly ranked quality was "intelligence".
And many more Democrats than Republicans admitted to the pollsters that they were voting against their opponent rather than for their own candidate.
Finding a new Democratic leader will not be easy.
The party also lost their minority leader in the Senate, Tom Daschle, who was defeated in a bitter race in South Dakota.
And US parties in opposition lack a mechanism for uniting around a central figure - as the long, drawn-out race for the 2004 nomination showed.
But beyond the leadership question, there are deeper questions for Democratic strategists.
The Republican success, both at the local and national level, has been based on mobilising their socially conservative base, which has strong views on issues such as abortion and gay marriage.
Senator Kerry attempted to energise his own liberal supporters by speaking out on issues like abortion - where he pledged to ensure that the Supreme Court would maintain a woman's right to choose - and stem cell research, which he wanted to expand.
The Democrats must keep their dwindling Southern base alive
And these issues do appeal strongly to the Democratic base, including women, the highly educated, and those who live in big cities.
But these groups are not large enough to overcome Republican advantages among the married, suburban voters, and white Protestants.
And this approach has given the Democrats problems in the socially conservative Deep South, which has been steadily moving towards the Republicans over the last three decades.
The Democrats do retain strength among African-Americans, but the other part of their rainbow coalition, the Hispanic vote, is heading towards the Republicans on social issues.
The Democrats could take another tack, trying to appeal more to their working class supporters. Election returns show Mr Kerry won 60% of union voters, for example.
And indeed the Democrats do have a strong appeal to voters earning under $30,000 annually, who make up one-quarter of the electorate.
However, turnout among poorer voters has traditionally been low.
But the bigger difficulty is that the Democrats have spent the last decade repositioning themselves as the party of fiscal responsibility.
By implementing welfare reform under President Clinton, the Democrats signalled that they were " new Democrats" who rejected the old redistributive policies of tax and spend - a position broadly re-affirmed by Senator Kerry.
And the modern Democrat party now goes right up the income scale, also appealing to 43% of voters earning more than $150,000.
The Democrat's rich supporters have been increasingly important in funding their campaign as elections have become ever more expensive.
Seeking a cause
The Democratic party has always been something of a broad coalition.
At its peak, during Franklin D Roosevelt's New Deal in the 1930s, the Democratic Party included Catholic immigrants in Northern cities and rural Southerners.
But that coalition was based on action to tackle mass unemployment during the Great Depression.
The Democrats are still looking for an issue that will unite their increasingly diverse group of supporters.
Health care reform has not proved to be such an issue - and Democratic activists lack a vision of the future that will galvanise the party.
Now the Democrats' depleted leadership will face an energised Republican party - with a controlling majority in Congress - that is determined to deliver benefits to its Christian and conservative supporters.
In his concession speech, Senator Kerry urged all Americans to work together for the good of the country and pledged his support for US efforts in Iraq.
It will now be up to the Republicans to bridge the growing partisan divide.
The exit poll was conducted for AP and the US networks by Edison Media Research/Mitofsky International during the voting on 2 November. The sample size was 13,531 and the margin of error is +/-1%.