Kamala Harris is running for president on two economic platforms: the first is the record of the Biden-Harris Administration, and the second is her own prescription for fixing what voters don’t like about the Biden-Harris Administration’s record.
It could work: The timing is right, given that inflation, Biden’s biggest economic thorn, is returning to normal just as key undecided voters are making their decisions. And Harris’ own plan is clearly intended to fill the gaps where voters believe Biden failed.
On paper, the economy appears headed for the “soft landing” economists had hoped for. Inflation continues to moderate, with the July rate at 2.9%, the lowest since March 2021. Inflation is down significantly from its peak of 9% in June 2022, suggesting that the Federal Reserve’s sharp rate hikes are working as intended to curb price increases. Investors now believe it’s almost certain that the Fed will begin to slowly cut interest rates in September, giving borrowers some much-needed respite.
Consumer spending is holding up. Retail sales rose much faster in July than economists expected, driven by strong auto sales. The latest data essentially dispels concerns that emerged after July’s employment report showed signs of shaky weakness. A minor market panic ensued in early August, but that selling pressure has now completely reversed, with stocks rising this month as investors decided that maybe all was well after all.
Recent insights from leading forecasters are summarized below.
The Conference Board, August 16: “Welcome to a Soft Landing.”
Capital Economics, August 16: “All the data released this week was consistent with a soft landing.”
Goldman Sachs, August 14: “We [the second half] This reflects rising consumer spending, easing financial conditions and a recovery in inventory investment.”
President Joe Biden and Vice President Kamala Harris embrace during an event about the administration’s efforts to reduce prescription drug costs, Thursday, Aug. 15, 2024, at Prince George’s Community College in Largo, Md. (Photo by Associated Press/Stephanie Scarborough) (The Associated Press)
Needless to say, this isn’t enough. Consumers remain pessimistic, frustrated by persistently high rent and grocery prices, high interest rates that prevent them from making big purchases, and chronic burdens like high child care and health care costs. Here, Harris is proposing a reboot, promising to fix what Biden clearly failed to do.
Harris’ economic plan tackles the affordability of home buying by providing a $25,000 tax credit for first-time homebuyers and incentives to add 3 million new homes to the nation’s housing supply. She also supports lowering the cost of healthcare for Americans and a $6,000 tax credit for families with newborns. She also wants the government to ban “price gouging” on groceries and go after food conglomerates that allegedly rip off shoppers.
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Biden supported similar policies, but his continued efforts to lower prices were not popular with voters. The biggest measures would require legislation in Congress, which Biden cannot do because Republicans control the House of Representatives. Harris would face the same problems unless Democrats win with full control of Congress, which is unlikely. So she may be less equipped than Biden to address the cost disparities that still bother voters.
But Harris seems to have a kind of grace period that Biden did not: In one surprising poll, voters rated her higher on the economy than Biden and Republican opponent Donald Trump, even though Harris has no other record on the national economy. Respondents in that poll suggested they trusted Harris more than Biden because they expected her to pursue different policies than Biden if she won the presidential election.
That means Harris has to convince voters that she’s not Joe Biden. In reality, she’ll likely take very similar positions to Biden on the big issues of taxes, health care, energy and regulation. But that’s not how you win in 2024.
Biden always boasted during his campaign that the economy was doing well: job growth was strong, inflation was falling, spending was booming, and stock prices were rising. His approval ratings are low because voters aren’t holding him accountable. But that solid economic base allows Kamala Harris to target the economic woes that Biden couldn’t erase. Not a bad one-two punch.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on X. Follow.
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