The US economy continues to grow, Americans remain dissatisfied, and the situation is normal.
Can Kamala Harris get Americans more excited about a robust economy than Joe Biden? We’ll see soon. But for now, Americans are still adjusting to the most volatile presidential election in decades.
The latest uproar, of course, was President Joe Biden’s shock withdrawal from the race on July 21, less than four months before Election Day. Biden’s withdrawal came in the wake of the assassination attempt on Republican candidate Donald Trump on July 13, six weeks after a New York jury found Trump guilty of 34 felony counts.
Vice President Harris has quickly gained a lead in the Democratic presidential race and is set to win the official presidential nomination at the party’s convention in August, but she is already campaigning as the natural successor to Biden, who has played the Democratic Party’s leading role.
So Harris’ job is to convince the American people that the economy is really as strong as the numbers suggest. The latest evidence in Harris’ favor is real GDP growth of 2.8% in the second quarter, the umpteenth time that economic growth has exceeded economists’ expectations under the Biden/Harris administration. Except for the first half of 2022, economic growth has been consistently strong under the Biden/Harris administration.
Also, a key inflation measure released on July 26 showed that inflation is returning to normal levels. Investors are betting the Federal Reserve will definitely start cutting interest rates in September, which would mean future relief for homebuyers and other borrowers.
Economic champions? President Joe Biden and Vice President Kamala Harris meet in Philadelphia last year. (Associated Press Photo/Patrick Semansky, File) (Associated Press)
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Hiring has slowed a bit but remains strong, which is exactly what the Fed wants to see before cutting rates. All of this data speaks to the past, not the future, but economists are predicting this is a perfect “soft landing” with no unfortunate surprises in sight.
“Economic dynamics are encouraging,” Oxford Economics said in an analysis of the July 25 GDP data. “Real consumer spending growth has picked up after a disappointing first quarter. Easing inflation is boosting real disposable income, which we expect will support spending in the second half of the year.”
Meanwhile, Goldman Sachs expects full-year GDP growth to be 2.3% in both 2024 and 2025, with inflation returning to pre-COVID levels by next year. The New York Times recently published an article arguing that no matter who is president in 2025, we will likely enjoy a Goldilocks economy with normal inflation, falling interest rates, and sustained growth.
The story continues
So, the normally gloomy American is finally feeling cheerful, right? No, not quite.
The University of Michigan’s Business Sentiment Index fell in July and remains well below pre-COVID levels. Consumers appear more willing to spend, but persistently high prices and interest rates continue to hurt them. Many Americans believe the economy is in recession, but that’s simply not true.
With Harris replacing Biden as the Democratic presidential nominee and topping the incumbent, we can now conduct an experiment on public sentiment on the economy. Is Joe Biden himself the main reason people are feeling down, or is it simply the state of the economy?
In her first week as Biden’s successor, Harris has been cruising the country sporting a big, confident smile and promising to defeat Republican rival Donald Trump. Polls show her leading Biden against Trump, and younger voters, especially those fed up with how older people have screwed up the country, seem to be turning to her. Compared to Biden’s weak, raspy voice, Harris seems more relatable.
If voters want a younger, more energetic messenger on the economy, they should respond positively to Harris touting the Biden-Harris team’s record job gains and legislative accomplishments. It’s a timely advantage for Harris just as voters are deciding who to vote for this fall.
If voters remain pessimistic, they will find a fellow grump in Trump, who has mastered the art of complaining, constantly reminding his audiences of what is wrong, or could be wrong, with America. The economy is not one of those issues, and Kamala Harris could be the apostle of OK that voters have been waiting for.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on X. Follow.
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