Politico · Ben Curtis/AP
Victoria Guida
Thu, October 10, 2024
Annual inflation has fallen to 2.4 percent, its slowest pace since early 2021, signaling that the price spikes that have clouded President Joe Biden’s four-year term are over.
The latest numbers, released on Thursday, add to a solid economic picture that's coming together just weeks before the 2024 election. The question now is whether it’s too late for Vice President Kamala Harris to get credit for it.
The unemployment rate stands at 4.1 percent, the S&P 500 stock index is up more than 20 percent this year, and GDP has been growing at a robust 3 percent pace. Middle-class Americans are more optimistic about their financial future than they were a year ago. And with inflation approaching the Federal Reserve’s 2 percent target, Chair Jerome Powell has begun lowering interest rates, providing relief to debt-burdened businesses, credit card holders and potential homebuyers.
But polls still show that Americans trust GOP presidential nominee Donald Trump on the economy more than they do Harris, a sentiment that plagued Biden throughout his presidency.
“While Harris is performing better than Biden was against Trump on handling the economy … being given some benefit of the doubt as a newer candidate, voters still feel that day-to-day costs are expensive and thus there is a limit to how much improvement this news will bring for her,” said Carly Cooperman, a Democratic pollster who is CEO of Schoen Cooperman Research.
But, she added, it certainly doesn’t hurt.
“Poor inflation numbers would have caused a good deal of harm to her at this point, as this is likely to be the most important issue to undecided voters in critical swing states,” she said.
The positive economic picture is a remarkable victory for both Biden and Powell, even as consumers still feel squeezed by higher prices. Last year, economists widely expected that the central bank might cause a recession in its bid to choke off inflation. Instead, the job market has remained resilient and economic growth has not slowed.
Still, according to a NYT/Siena poll, voters still mostly rate the economy as fair or poor. And while Harris has been closing the gap with Trump on who voters trust on the economy, she still trails him, according to the latest polling from Gallup.
Gas prices have been falling, one of the elements that contributed to the drop in annual inflation in September, a politically salient number.
According to a survey by Santander US of middle-income Americans, 81 percent of people still consider inflation a major concern. But 71 percent say they’re on the right track toward financial prosperity.
Powell’s Fed is warily watching for signs of weakness in the job market, where unemployment has risen from lows of 3.4 percent. Fed officials argue that the labor market is now in better balance, with the number of job seekers and job openings in more of an equilibrium than when “Now Hiring” signs adorned businesses across the country. But they also want to prevent a surge in layoffs.
There was good news on that front last week when the Labor Department estimated that the economy added a net 254,000 jobs in September — far higher than expectations.
Matthew Luzzetti, chief U.S. economist at Deutsche Bank Securities, said he’s less worried about the job market now than he was a few weeks ago.
“The latest data suggest greater stability in the labor market story, with hiring trends not as weak as believed,” he said. “If it continues — and I suspect it will, given a solid consumer backdrop — there will be a larger buffer for payrolls to remain resilient even if layoffs” rise.
Inflation has come down due to a combination of factors — higher rates and a smoothing out in supply chains that were scrambled by Covid, as well as an influx of workers, such as immigrants, who have joined the workforce and helped meet unusually high demand for labor.
Now the hope is that the central bank can ease off the economy without causing a dangerous rise in unemployment.
“Fed help is on the way and, as long as inflation remains reasonably well behaved, there’s a cap on how much worse the labor market can get,” said Guy Berger, director of economic research at the Burning Glass Institute. “We’re just not seeing recessionary dynamics kicking in, at least not yet. There’s time for policy to save the day.”
Victoria Guida
Thu, October 10, 2024
Annual inflation has fallen to 2.4 percent, its slowest pace since early 2021, signaling that the price spikes that have clouded President Joe Biden’s four-year term are over.
The latest numbers, released on Thursday, add to a solid economic picture that's coming together just weeks before the 2024 election. The question now is whether it’s too late for Vice President Kamala Harris to get credit for it.
The unemployment rate stands at 4.1 percent, the S&P 500 stock index is up more than 20 percent this year, and GDP has been growing at a robust 3 percent pace. Middle-class Americans are more optimistic about their financial future than they were a year ago. And with inflation approaching the Federal Reserve’s 2 percent target, Chair Jerome Powell has begun lowering interest rates, providing relief to debt-burdened businesses, credit card holders and potential homebuyers.
But polls still show that Americans trust GOP presidential nominee Donald Trump on the economy more than they do Harris, a sentiment that plagued Biden throughout his presidency.
“While Harris is performing better than Biden was against Trump on handling the economy … being given some benefit of the doubt as a newer candidate, voters still feel that day-to-day costs are expensive and thus there is a limit to how much improvement this news will bring for her,” said Carly Cooperman, a Democratic pollster who is CEO of Schoen Cooperman Research.
But, she added, it certainly doesn’t hurt.
“Poor inflation numbers would have caused a good deal of harm to her at this point, as this is likely to be the most important issue to undecided voters in critical swing states,” she said.
The positive economic picture is a remarkable victory for both Biden and Powell, even as consumers still feel squeezed by higher prices. Last year, economists widely expected that the central bank might cause a recession in its bid to choke off inflation. Instead, the job market has remained resilient and economic growth has not slowed.
Still, according to a NYT/Siena poll, voters still mostly rate the economy as fair or poor. And while Harris has been closing the gap with Trump on who voters trust on the economy, she still trails him, according to the latest polling from Gallup.
Gas prices have been falling, one of the elements that contributed to the drop in annual inflation in September, a politically salient number.
According to a survey by Santander US of middle-income Americans, 81 percent of people still consider inflation a major concern. But 71 percent say they’re on the right track toward financial prosperity.
Powell’s Fed is warily watching for signs of weakness in the job market, where unemployment has risen from lows of 3.4 percent. Fed officials argue that the labor market is now in better balance, with the number of job seekers and job openings in more of an equilibrium than when “Now Hiring” signs adorned businesses across the country. But they also want to prevent a surge in layoffs.
There was good news on that front last week when the Labor Department estimated that the economy added a net 254,000 jobs in September — far higher than expectations.
Matthew Luzzetti, chief U.S. economist at Deutsche Bank Securities, said he’s less worried about the job market now than he was a few weeks ago.
“The latest data suggest greater stability in the labor market story, with hiring trends not as weak as believed,” he said. “If it continues — and I suspect it will, given a solid consumer backdrop — there will be a larger buffer for payrolls to remain resilient even if layoffs” rise.
Inflation has come down due to a combination of factors — higher rates and a smoothing out in supply chains that were scrambled by Covid, as well as an influx of workers, such as immigrants, who have joined the workforce and helped meet unusually high demand for labor.
Now the hope is that the central bank can ease off the economy without causing a dangerous rise in unemployment.
“Fed help is on the way and, as long as inflation remains reasonably well behaved, there’s a cap on how much worse the labor market can get,” said Guy Berger, director of economic research at the Burning Glass Institute. “We’re just not seeing recessionary dynamics kicking in, at least not yet. There’s time for policy to save the day.”
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