Why the Strength of the American Economy Doesn't Overcome Voters' Pessimism?

Photo: Evelyn Hockstein Pool via Associated Press A University of Michigan poll released Sept. 20 showed that 41 percent of respondents said Harris was “better for the economy,” compared with 38 percent for Donald Trump.

Julie Chabanas – Agence France-Presse and Beiyi Seow – Agence France-Presse in Washington

Posted at 10:51 am

• United States

The U.S. economy is showing unexpected strength, and job creation has again exceeded expectations in September, but while the issue is crucial less than a month before a very close election between Kamala Harris and Donald Trump, voters remain less than optimistic.

Inflation is slowing, the much-heralded recession has not occurred, consumption remains solid, the strength of the jobs market continues to surprise… And yet, nearly half of the people questioned for a poll New York Times/Siena College published Tuesday judge the economic situation to be “bad.”

Because, after three years of high inflation, “high prices are hurting people’s wallets and that’s really what’s weighing on consumer confidence, even though the indicators are strong,” Joanne Hsu, director of the University of Michigan’s monthly consumer confidence survey, told AFP.

Prices are indeed more than 20% higher than they were at the start of 2020.

“Just seeing prices rise regularly weighs on the collective psyche, particularly for low- and middle-income households,” says Ryan Sweet, an economist at Oxford Economics.

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Voter Priority

Republican candidate Donald Trump regularly pulls on this sensitive chord to appeal to voters, pointing out that prices are much higher today than when he was in power.

“Inflation has devastated our economy,” he said Friday in Augusta, Georgia.

“With (Kamala Harris) in office, inflation is going to skyrocket,” he hammered home Sunday at a rally in Juneau, Wisconsin, promising that conversely, if he wins the election, “from day one of my new administration, […] we will make America affordable again.”

The economic situation is one of the priorities of American voters. And “the fact that people don’t feel like they’re thriving in this economy is a real challenge for the party in power,” notes Joanne Hsu.

The Democratic Party, however, seems to be gaining traction on the economy a bit more since Kamala Harris became a candidate, after Joe Biden withdrew in July.

A University of Michigan poll released on September 20 showed that 41% of respondents believe Kamala Harris is “better for the economy,” compared to 38% for Donald Trump.

The same survey in July, when Joe Biden was still a candidate, showed Donald Trump leading on this question, with 40% to 35%.

American Dream

Kathy Bostjancic, chief economist at Oxford Economics, also points to a study by the Congressional Budget Office (CBO), an independent agency, which showed in May “that household purchasing power is actually better (today) than it was in 2019.” ».

Wages have indeed been higher than inflation since May 2023. But that’s not true for everyone, and many households have used their credit cards to pay for their purchases, now struggling to repay them.

And with rising prices, the famous “American dream” is being shaken.

“Buying a home is incredibly less affordable today than before the pandemic,” Kathy Bostjancic points out, between prices that have soared and interest rates “still well above 6%” for home loans.

Inflation has certainly slowed significantly since its peak of 9.1% over one year in June 2022 and was only 2.5% in August, according to the CPI index, which is used to measure inflation. indexed pensions. And the 2% target, considered healthy for the economy, is not far away.

In September, the unemployment rate also fell slightly to 4.1% and job creation was well above expectations.

But these figures “mask massive variations”, with employment growth “heavily concentrated in just a few sectors”, Julia Pollak, chief economist for the job advertisement site ZipRecruiter, told AFP.