Staff Reports
The economy has taken center stage in the upcoming election, a fact not lost on Vice President Kamala Harris, who finds herself partially shackled by President Joe Biden’s less-than-stellar economic approval ratings. As she attempts to divert attention away from the soaring inflation and economic mismanagement under this administration, former President Donald Trump asserts that voters would fare much better under his watch—the classic tale of the hare and the tortoise, minus the happy ending.
As if the economy were not the elephant in the room, it’s become the proverbial elephant in the voting booth. Every economic report is scrutinized and weaponized by both campaigns as they swing at each other like kids in a schoolyard. The inflation issue, prominently at the forefront, is akin to a game of hot potato—everyone is trying to avoid holding onto the blame.
Thoughts —> Michael Hartnett, BofA | This Is The Most Contrarian Post-Election Trade
– the latest election probabilities per Oddschecker, Trump sweep 37%, Trump split 29%, Harris split 21%, Harris sweep 13%. A Trump victory has become consensus, which means that higher US yields… pic.twitter.com/GtnmQW0xFa
— Opulent Vocation (@OpulentVocation) November 4, 2024
Inflation is undoubtedly the top economic worry for many voters, and under Biden, the nation has seen its worst spike in decades, with inflation peaking around 8% in June 2022. Though recent reports indicate some progress, with inflation easing to 2.4% as of September, it’s still above the Federal Reserve’s desired target of 2%. Meanwhile, Democrats may cheer about falling inflation, but Republicans aren’t shy about pointing fingers, highlighting that it was Biden and Harris who set the inflationary fires in the first place. While the needle is pointing in the right direction, many consumers feel the pinch in their wallets—a phenomenon that isn’t lost on any astute voter.
The Fed may indicate that things are stabilizing, but the reality is that core inflation—excluding food and energy—has risen to 3.3%. So, for those keeping track, inflation may be declining, but prices are still climbing, albeit at a slower pace, which is like saying a car crash is progressing at a safer speed—hardly a comforting thought. As for the personal consumption expenditures index, the more “serious” inflation metric, it shows inflation nudging down to 2.1%, a brief reprieve that has voters questioning if they should celebrate or simply brace for more price hikes.
Interest rates also play a significant role in voters’ economic struggles. The Fed has gradually raised rates from near zero during the pandemic to a current range of 5.25% to 5.50%, which has made borrowing money about as pleasant as a root canal. Financing a car or a home has become increasingly painful, turning dreams of new wheels or a home into distant fantasies for many. The Fed’s recent decision to cut rates for the first time in September may not heal the wounds inflicted during the inflationary phase, but it does show there’s some recognition of the ongoing struggles voters face.
In the job market, Harris may depict a story of triumph, attributing the addition of 16.5 million jobs since January 2021 to her leadership. However, the context matters here. When Biden took office, the job market was still in recovery mode from the pandemic’s devastation, and a significant number of jobs had yet to return. The recent jobs report paints a concerning picture, with only 12,000 jobs added in October, falling dishearteningly short of expectations. Even worse, this marks the first time since the pandemic that the private sector has actually shed jobs, raising alarms louder than a fire alarm in a crowded theater. The Trump campaign has seized this news, highlighting how Harris’s economic decisions have led to job losses, challenging the VP to defend claims of economic progress.
As the economic narrative unfolds ahead of the election, it seems the housing market is yet another casualty of inflation and steep interest rates. Existing home sales plummeted to their lowest in 14 years and, despite recent drops in mortgage rates, the market remains stagnant. First-time buyers, once a vibrant segment of the market, are facing near-impossible odds in securing homes, questioning whether they’ll ever enter the housing race. With all these indicators, one thing is clear: any optimistic spin the Democrats might conjure up will have a tough audience as voters continue to grapple with the realities of the economic landscape Biden and Harris have crafted.
