US consumer moods improved marginally early this month, apparently in response to Joe Biden’s decision not to seek reelection.
The main University of Michigan gauge printed 67.8, not “good” by any stretch, but better, at least, than July’s abysmal headline.
As the simple figure below shows, it was the first increase since March.
There’s a very long way to go before Americans can be described as upbeat.
The marquee gauge of consumer sentiment remains at levels consistent with an economy that looks nothing like Biden’s. The disconnect between perception and “reality” (note the scare quotes) is a testament to a lot of things, partisanship among them. But the disparity between three- and low four-handle unemployment and “stubbornly subdued” sentiment (to use the Michigan survey’s own language from the July release) is primarily attributable to the legacy of inflation.
I’ve said this again and again, but Donald Trump would do well to pull it together and re-focus his campaign messaging on consumer prices and the border. JD Vance landed a few jabs this week when he said, of falling inflation,
When they say that inflation is down, they mean from a baseline where groceries are already 30% more expensive than they were when Donald Trump was president. They’re not saying prices are coming down, just that they’re not going up as fast as they were three years ago. That is not a record to brag about — that’s a record to be ashamed of.
That’s the kind of thing Trump should be saying, or saying more of to the extent he is saying it. But after Biden dropped out, Trump’s behavior turned noticeably self-destructive, as evidenced by attacks on Brian Kemp at Georgia campaign stops and a disastrous, Ron Burgundy-esque cameo at a National Association of Black Journalists event in Chicago.
Vance isn’t helping, frankly. He’s off-putting, outwardly snide and not always savvy. Just a day after delivering the incisive (albeit not exactly groundbreaking) assessment of inflation dynamics quoted above, he stumbled into a PR debacle when he posed for the silly selfie shown below with Rep. Mike Waltz.
For one thing, being a Diet Mountain Dew fan isn’t something to brag about, but more to the point, someone in Vance’s team probably should’ve noticed the headline on The Wall Street Journal sitting in front of the would-be VP: “Inflation Hits Lowest Level Since 2021.”
Anyway, the Michigan survey suggested sentiment among Democrats inflected this month as Harris ascended the ticket. That speaks to a point I’ve made in these pages repeatedly over the past two weeks: It’s ridiculous to claim that Democrats subverted the will of voters by pushing Biden out. Democratic primary voters didn’t vote for Biden because they wanted him to run, they voted for Biden because he was (functionally and for all intents and purposes anyway) the only person on the ballot. If I’m dying of thirst in the desert and a Diet Mountain Dew falls from the sky, I’ll drink it, but that doesn’t mean I like Diet Mountain Dew.
On Friday, Harris unveiled an economic plan that includes $25,000 in assistance for first-time homebuyers, a quixotic (and thereby meaningless) ban on grocery “price gouging” and additional tax incentives for builders to construct more rental housing. Predictably, some of the proposals elicited Venezuela comparisons from the likes of Elon Musk. To call such criticism balderdash would be generous.
I said late last month that Biden’s inflation legacy is Harris’s inflation legacy too. I still believe that, but another way to think about it is that Harris isn’t Biden. If Democrats were going to win or lose depending on how angry Americans are about inflation, it’s surely better (if only incrementally so) that Biden isn’t on the ballot.
Editorializing around the Michigan survey results, director Joanne Hsu said Friday that consumer moods “are subject to change as the presidential campaign comes into greater focus,” and noted that inflation remains Americans’ “top concern.” At 2.9%, inflation expectations were unchanged at the one-year point in the survey. Longer-term expectations are still loitering at 3%.
Righteously aggrieved though American families are about high prices, I don’t think those prints (the expectations readings) evidence enough in the way of panic about the future to swing the vote for Trump if indeed the Democratic map has expanded with Harris at the helm.
Questioning Harris’s relative blackness (as Trump’s now taken to doing), smearing Tim Walz’s military record and just generally doubling and tripling down on the most divisive elements of the MAGA platform may be a suboptimal strategy in the presence of long-hanging fruit. Grievance politics is a powerful thing, but Trump and Vance need to stay on the macro message: After all, there’s no grievance greater and more genuine than inflation.
“Inflation is the cruelest tax” as they say.
I didn’t live through the 70s (which was worse) but the past few years have shown how soul sucking it is seeing your standard of living erode. I’ve been extremely fortunate to have enough means to withstand most of it but absolutely brutal for those living paycheck to paycheck.
Yeah, I mean just imagine having 9-handle inflation to work with as a line of political attack and instead choosing to question the authenticity of your opponent’s ethnicity. It’s ludicrous. If I were Trump, every other word out of my mouth would be “inflation.” He was doing a good job of that right up until Biden dropped out, and then he started to lose the plot. I could understand flailing if, for example, Michelle Obama had jumped in or some other deus ex machina had upended the race. But Harris is just the VP. Why is it so destabilizing for Trump? They (his campaign) should’ve been preparing for Harris since Day One. There’s no excuse for the flailing, and the perception of that flailing is amplifying the excitement around Harris. It’s self-fulfilling, and if Trump doesn’t turn it around and/or win the debate, it’s gonna be a very tough fight to get over the top in November.
Yeah, Trump would do well to stick to inflation and border as the only things he talks about, but we all know he is incapable of discipline and avoiding personal attacks.
We’re starting to see some own goals from Kamala as well with the rollout of her economic plan. Going after grocers for price gouging is going to ring hollow. She’d be better off focusing on abortion, Trump torpedoing the bipartisan border deal, and JD Vance being a heartbeat away from the presidency while offering family-focused economic proposals like tax credits and free lunches for kids, paid parental leave, and maybe throw in some middle class tax cuts. On top of that, just try to keep baiting Trump into saying stupid stuff which shouldn’t be hard to do.
When the conversation inevitably turns to inflation, talk about Trump wanting to increase prices by taxing (via tariffs) all the goods families need to buy and figure out a way to speak about Trump wanting to eliminate Fed independence in a way that voters can understand and why that could lead to economic catastrophe.
Yep.
And I am not even opposed to taking a look at ‘profiteering’ inasmuch as I think that you could have “asked” oil companies or grocers to “take one for the team” in 2021 and not increase prices faster than costs, just because they could.
OTOH – it’s a n issue that would require some nuanced discussions around implementation, even if you decided it was worth doing, and the campaign trail is the worst place possible for a nuanced discussion…
H-Man, you missed Trump’s best argument — the size of his gatherings vs her fake crowds.
Politics aside, does anyone have a real solution for high inflation. All approaches that have a chance require some pain for the populace and no politician is going to broach that. If a democrat gets elected with some congressional might then we’ll muddle through – hopefully. With Trump 2, I don’t want to even contemplate what could happen. He’s a ship full of loose cannons.
Inflation has been a global problem triggered by the pandemic fight to stave off a recession or worse. From what I read the US has done better than most developed economies. In a propaganda war you can blame Biden, but looking at reality there’s not much he could have done differently.
The solution to sticky inflation and higher baseline prices for everything is to keep the Fed Funds rate where it is until we start to see deflation. I think most Americans would be fine with that; the masters of the universe, not so much.
That’s both slow and unpredictable. “Keep hiking until something breaks” has triggered recessions before.
A sounder approach would be to use taxes (and, to a lesser degree, fiscal spending). The problem with varying tax rates is that it’s politically suicidal because the population doesn’t know shit about even basic economics.
But, fwiw, it used to be that interest rates were very stable and it was the quantity of money provided to the banks by the Fed that was the variable of adjustment (through banking reserves). That changed in the late 60s early 70s… And now everyone is used to the government (the Fed but that’s still a governmental institution) varying interest rates aggressively to respond to macro concerns.