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Kamala Harris’ Economic Pitch Just Got A Lot More Complicated
Even when the economy was booming, the Biden-Harris administration couldn’t shake the “vibecession”. It may be much more difficult now that fractures are appearing in the labor market.
Americans have been dissatisfied with the economy for over three years because prices have risen, and many consumers have blamed the White House fairly or unfairly. Inflation is now more or less under control, but it has come at a cost: the job market, while historically strong, is beginning to erode.
Last month, the economy added only 114,000 jobs, and unemployment increased to 4.3% from 4.1%, owing primarily to a surge in job searchers returning to the labor force. It wasn’t a horrible jobs report, but it starkly contrasted to June, when the economy added 179,000, and May, when it added 216,000.
The jobs report was far from a disaster, and it is no guarantee of an approaching recession. But it was unexpected, and analysts expressed concern about how swiftly the labor market contracted.
Kamala Harris | CNN Image
Kamala Harris’ Economic Pitch Just Got A Lot More Complicated
“We don’t know how quickly the labour market is softening, but it appears pretty darn clear,” said Heidi Shierholz, head of the Economic Policy Institute, a left-leaning think tank.
One month is insufficient to identify a trend, but it is enough to substantially challenge Vice President Kamala Harris’ economic appeal as the new expected Democratic nominee.
“The reason investors are reacting the way they are is because we are back, in many ways, to where we were during the dot-com bubble,” said CFRA Research’s chief financial strategist, Sam Stovall. “And at the same time, it’s just a reminder that investors are no better than hyperactive first-graders playing musical chairs, always trying to out-anticipate the other as to when the music will stop.”
Investors got a little crazy on Friday, sending US equities plummeting. The Dow fell more than 600 points, or 1.5 percent. The S&P 500 fell 1.8 percent, while the Nasdaq Composite fell 2.4 percent, placing the tech-heavy index in correction territory (down 10% from its peak on July 10).
(In other words, Wall Street may have overreacted because that is exactly how they do things.)
Until recently, the labor market had held up quite well despite the strain of increased interest rates, which made it more difficult for businesses to expand. Cracks are starting to appear; however, as jobless claims grow, unemployment rises, and fewer people change jobs.
Kamala Harris’ Economic Pitch Just Got A Lot More Complicated
Historically, this is a terrible indicator for the incumbent party. According to a recent Refinitiv analysis, when the unemployment rate lowers in the two years leading up to an election, the incumbent is more likely to be re-elected. Unsurprisingly, challengers usually benefit when the unemployment rate rises before an election.
It’s not a perfect indicator—there have been a few outliers to the trend in the last 64 years—but unemployment has grown 0.8 points in the last two years, which could pose an additional challenge for Harris.
Republicans have used Americans’ inflation fatigue to criticize President Joe Biden’s economic policies while downplaying (or just ignoring) month after month of record employment growth. With inflation falling, the GOP now has new material to use to advance its claim that the economy is in disarray despite the fact that it is historically robust by nearly all measures.
“This jobs report is one of the worst we have ever seen from the Biden-Harris Administration,” Missouri Rep. Jason Smith said in a statement on Friday. “Another dreadful jobs report under Biden/Harris’ leadership,” said the Connecticut GOP on X.
Kamala Harris’ Economic Pitch Just Got A Lot More Complicated
For over three years, the Biden administration has been able to counter Republican accusations with a slew of positive labor market data: earnings surpassing inflation, 16 million new jobs, and unemployment remaining around 4%.
However, survey after poll revealed that inflation fatigue overshadowed almost everything else on voters’ concerns. It didn’t matter how much wages increased or how plentiful the employment was; the vibes were horrible.
The labor market is strong, but its advantages have increasing limitations. And “it’s complicated” isn’t exactly a surefire way to charm voters.
SOURCE | CNN
