With the presidential race moving past Labor Day, time is running out for Vice President Kamala Harris to receive a significant boost from any positive changes to the wobbly economy.
Prices are still about 20% higher than when Ms. Harris and President Biden came into office, and there are recent signs that the labor market is weakening. Those factors are among the reasons that voters consistently rank the economy and inflation as their top concerns by far in numerous polls.
One of the few actions that could ease voters’ economic concerns before November will take place on Sept. 18, when the Federal Reserve is expected to bring interest rates down from a 23-year high. Fed Chairman Jerome Powell said late last month that “the time has come” to cut rates, with most analysts forecasting a relatively small quarter-percent cut in the central bank’s benchmark rate.
The move will make it slightly less expensive for consumers to borrow money for a new car or a home. But after three-plus years of interest rates rising to fight high inflation, a move heading slowly back down that hill is not expected to create a sudden or dramatic turnaround in the economy.
“We are skeptical that the upcoming easing cycle will produce a soft landing,” the investment firm BCA Research said in a note to investors, predicting a recession. “Economic conditions are currently responding to the previous tightening cycle and this new easing cycle is likely to be too little too late.”
Further, voting in several key states will begin weeks before the climactic Nov. 5 Election Day. Early voting starts Sept. 16 in Pennsylvania, Sept. 20 in Virginia, Oct. 9 in Arizona, Oct. 15 in Georgia, Oct. 17 in North Carolina, Oct. 19 in Nevada, Oct. 22 in Wisconsin and Oct. 26 in Michigan.
Republican strategist John Feehery said the economy and crime “are the two biggest issues in the race” and will affect the presidential election in swing states such as Wisconsin. He predicted GOP nominee Donald Trump will win Wisconsin, Pennsylvania, Georgia, Arizona and Nevada, while Ms. Harris will win North Carolina and Michigan.
He predicted Mr. Trump will return to the White House.
As vice president, Ms. Harris will receive the brunt of voters’ anxiety about the economy. And recent indicators show why most voters say they’re still concerned.
Consumer confidence rose to a six-month high in August, but is still well below levels before the pandemic because of the higher cost of living and slackening job growth, the Conference Board said.
“Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic,” Dana Peterson, chief economist at the Conference Board, said in a statement. “This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income.”
The administration acknowledged, in the midst of the Democratic National Convention, that the U.S. economy added 818,000 fewer jobs from early 2023 to early 2024 than it previously reported. It was the biggest downward revision in job growth since the financial crisis of 2009, adding to other signs of an employment slowdown.
Mr. Trump called it a “massive scandal.”
“The Harris-Biden Administration has been caught fraudulently manipulating Job Statistics to hide the true extent of the Economic Ruin they have inflicted upon America,” he wrote on Truth Social. “If Comrade Kamala gets another four years, millions more Jobs will VANISH overnight, and Inflation will completely destroy our Country.”
Stocks have been a bright spot this year. The S&P 500 was up more than 15% through late August, despite a one-day plunge of more than 2% on Aug. 7, the biggest drop since the crash of 1987.
Housing affordability is another major concern. Even as mortgage interest rates were rising, home prices reached the highest level ever in June.
Home prices nationally were 5.4% higher than they were in June 2023, according to data released last week.
“While both housing and inflation have slowed, the gap between the two is larger than historical norms, with our National Index averaging 2.8% more than the Consumer Price Index,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, in a statement. “That is a full percentage point above the 50-year average. Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation.”
Further, the price increases in 75% of the housing markets studied show prices of lower-tier homes rising faster than the overall market.
“For example, the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes,” Mr. Luke said.
Mortgage rates have been declining in recent weeks, even without a rate cut by the Fed. The average rate of a home loan eased to 6.44% for the week ended Aug. 23, the Mortgage Bankers Association said.
Ms. Harris is proposing a plan to build 3 million new homes over four years, and for the government to provide as much as $25,000 in assistance to first-time buyers. Shelter costs are up 5.1% over the past 12 months, while the inflation was 2.9%.
“Vice President Harris knows we need to do more to address our housing crisis and that’s why she has a plan to end the housing shortage” and will crack down on “corporate landlords and Wall Street banks hiking up rents and housing costs,” said Dan Kanninen, the campaign’s battleground states director.
• Dave Boyer can be reached at dboyer@washingtontimes.com.
Please read our comment policy before commenting.