Under potential circumstances, Trump might outshine Harris due to inflation concerns.
As Vice President Kamala Harris serves under President Joe Biden, consumers have noticed a significant increase in the cost of living, including food, gasoline, and mortgage rates. This surge in expenses has led many Americans to blame the Democratic administration, and some experts believe this could give a decisive edge to former President Donald Trump in the upcoming race for the White House.
Since Biden came into power in 2021, inflation has increased by approximately 19%, with items such as food and gasoline serving as primary contributors to this exorbitant price increase. Inflation reached an all-time high of over 9% in 2022 and while it has since dropped, it continues to surpass the Federal Reserve's desired 2% target.
Several factors have been suggested for the sharp increase in prices, including pandemic-induced shortages and supply chain disruptions, energy price hikes due to the Russian invasion of Ukraine, and the strong US labor market which triggered substantial wage increases. Additionally, some economists attribute some of the inflation to fiscal incentives from both the Biden and Trump administrations.
In contrast, during Trump's time in office, the general price level rose by only 7.8%. Factors beyond a US president's control also played a role, such as the significant drop in oil prices under Trump's leadership during the COVID-19 pandemic.
Buying a house becomes a luxury
Though inflation has improved somewhat, Harris still faces a major challenge. Over the past few years, prices have risen steeply and remain high, making them a major concern for voters.
Moreover, the Federal Reserve has taken steps to combat inflation by raising interest rates, with current rates ranging between 5.25% and 5.3%. Although these rate hikes have helped to curb inflation, they have simultaneously increased living expenses by making loans and mortgages more costly.
Buying a home has become a luxury for many Americans, particularly those with lower incomes and younger generations. In October 2022, the interest rate for a 30-year mortgage hit 7.8%, the highest level in 24 years. Though mortgage rates have since declined, they continue to remain high at 6.4%. At the time Biden took office, interest rates were just 2.6%.
The Federal Reserve is expected to ease monetary policy in September, likely resulting in lower interest rates. However, the effects of this move are unlikely to be felt by voters before the November election, and Harris may not gain significantly from it.
Rental prices remain sky-high
For those unsure or unable to buy a home, renting proves to be a costly option as well. According to the Financial Times, rent prices reached a 42-year high of 8.1% in the spring of 2023, and stood at 5.2% in July. In a competitive "swing state" such as Arizona, an annual income of nearly $70,000 is needed to afford the rent for a two-bedroom apartment. This is close to double the median annual income of $37,209. A progressive think tank's poll reveals that 84% of voters in swing states consider housing costs to be an essential issue.
Trump's advisors urge him to focus on the inflation record of the Biden-Harris administration in his campaign, but he has chosen instead to wage personal attacks against his opponent. This works to Harris' advantage as it shifts the spotlight away from inflation and the Democratic candidate might benefit from this. The high inflation rates have impacted past US elections, dropping Democrat Jimmy Carter from the presidency to Republican Ronald Reagan in the early 80s.
As the US presidential election of 2024 approaches, the high inflation rates under the Biden-Harris administration could become a significant campaign issue. Despite the Fed's efforts to combat inflation by raising interest rates, buying a house and renting remain expensive alternatives for many Americans.
