After surging to the front of the field last summer, senator saw a series of lackluster finishes in the early contests

Elizabeth Warren, the liberal Massachusetts senator whose sweeping economic plans shaped the Democratic policy debate, dropped out of the presidential race on Thursday after struggling to regain the momentum that briefly made her a frontrunner for the nomination.

In what began as the most diverse field in history, Warren was the last major female Democratic presidential candidate in the race. Her departure sets up what is effectively a contest between two white men in their 70s – Joe Biden and Bernie Sanders.

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Warren informed staff of her decision during a meeting on Thursday morning.

“I want to start with the news,” she told campaign staff on a conference call. “I want all of you to hear it first and I want you to hear it straight from me: today, I’m suspending our campaign for president.”

She continued: “It’s not the scale of the difference we wanted to make, but it matters – and the changes will have ripples for years to come.”

At a press conference from her home in Cambridge, Massachusetts, the senator offered a frank assessment of her candidacy, in which she acknowledged that she had been effectively squeezed out of the race by Sanders on the left and Biden on the center.

“I was told at the beginning of this whole undertaking that there are two lanes: a progressive lane that Bernie Sanders is incumbent for and a moderate lane that Joe Biden was the incumbent for and there’s no room for anyone else in this,” she told reporters. “I thought that wasn’t right but evidently I was wrong.”

Her departure comes after a series of lackluster finishes in the early voting contests, including a demoralizing third-place finish in her home state of Massachusetts on Super Tuesday.

Warren, 70, recently cast herself as the “unity candidate” best positioned to bring together the Democratic party, even as she sharpened her criticisms of Sanders, Biden and multi-billionaire Mike Bloomberg, who she essentially drove out of the race with a devastating attack during a debate in Nevada last month. Bloomberg ended his bid on Wednesday.

In her call with staff, Warren said her team was “willing to fight, and, when necessary, we left plenty of blood and teeth on the floor”.

She said: “And I can think of one billionaire who has been denied the chance to buy this election.”

Biden called Warren “the fiercest of fighters for middle class families”, adding that her “work in Washington, in Massachusetts and on the campaign trail has made a real difference in people’s lives”.

Sanders praised his Senate colleague for running an “extraordinary campaign of ideas” and said the progressive movement “would not be nearly as strong as it is today” without her leadership.

Both candidates are aggressively pursuing her endorsement but she said she had no plans to immediately back either in the race.

“Let’s take a deep breath and talk about this for a little bit longer,” she told reporters on Thursday.

Warren’s campaign was widely recognized for its organization but early investment in states like Iowa failed to translate into wins. She came third there, a comparatively respectable finish that was overshadowed by the disastrous debacle over the reporting of the results.

Facebook Twitter Pinterest Warren at her Iowa caucus rally in Des Moines. Photograph: Brian Snyder/Reuters

That was followed by a fourth-place finish in New Hampshire. She slipped to fifth in South Carolina. And on Super Tuesday this week, where her team predicted she would have a “strong performance”, she did not win a single state: not even Massachusetts, where liberals split between her and Sanders while moderates broke heavily for Biden, who hardly campaigned there.

It was blow from which she unable to recover, despite a fundraising surge last month and field organizations in more than 30 states.

Trump immediately seized on her exit, referring to her by the racial slur “Pocahontas”. He said she was “going nowhere except into Mini Mike’s head”.

Trump gloated: “She cost Crazy Bernie, at least, Massachusetts, Minnesota and Texas. Probably cost him the nomination!”

In recent weeks, Warren has come under pressure from progressives backing Sanders to drop out and endorse him, in the way moderate contenders Pete Buttigieg and Amy Klobuchar aligned behind Biden after losing South Carolina. But Warren remained defiant, sharpening her attacks on Sanders, who she said was too polarizing, and Biden, whose vision she criticized as “small”.

Many of her most ardent supporters saw a double standard in the coverage of Warren: despite finishing ahead of Biden and Klobuchar in Iowa, she seemed to fade from the political conversation.

The scale of her loss, and comparisons to Clinton, confirmed for some that the nation was not ready to elect a woman president.

Asked on Thursday what role gender and sexism played in her campaign, Warren that was the “trap question” for every woman running for public office.

“If you say, yeah there was sexism in this race, everyone says, whiner,” she said. “And if you say no there was no sexism about a bazillion women think, what planet do you live on?”

She said one of the “hardest parts” about her decision to leave the raise was “all those little girls who are going to have to wait four more years”.

Warren, a former Harvard professor who specialized in bankruptcy law, entered the primary as a “fighter” with a mission to root out corruption in Washington. Her expansive economic proposals – from universal childcare to student loan debt relief to free college – became her trademark. “I have a plan for that,” became her tagline, appearing on T-shirts and coffee mugs.

Her plans were underwritten by a wealth tax on the richest Americans. The idea was so popular among her supporters that chants of “two cents” would break out at rallies, a reference to the amount per dollar that Warren promised to tax on wealth over $50m.

She was also known for spending hours after campaign events taking photos with supporters in what became known as her “selfie line”. The tactic was intended to highlight the time the candidate was able to dedicate to voters because she had eschewed high-dollar donor events.

Her rapidly expanding portfolio of policy proposals dominated the early contest of ideas. In polling last summer, Warren rose inexorably, even edging past Biden, then the frontrunner in some surveys.

Warren ran strong among educated women, including those who had supported Clinton in 2016 and were eager to see a woman elevated to the White House.

But despite receiving broad support among prominent black leaders and activists who were drawn to Warren’s sharp analysis of the connection between racial and economic inequality, she was never able to make inroads with the party’s most loyal constituency. In South Carolina, where African Americans make up more than 60% of the Democratic electorate, she won support from just 5% of black voters.

Democrats’ desperation to beat Trump resulted in an intense focus on “electability”, a calculation that can include gender and racial biases. Supporters believe voter obsession with electability hampered Warren’s candidacy as it had for other women and candidates of color who ran for the nomination, like Kamala Harris, Cory Booker and Julian Castro.

Asked during a debate to respond to Barack Obama’s assertion that more women should lead, the moderator noted that Warren would be the “oldest president ever inaugurated”.

She shot back: “I’d also be the youngest woman ever inaugurated.”