Consumer Says: How the economy is influencing voters this election

What's new in the economy?

• More signs of cooling in the U.S. labor market – the Bureau of Labor Statistics estimates that the U.S. only added 12k jobs in October, quite a bit lower than the expected 110,000.  BLS also revised down the previous two months of job gains, presenting more signs of a softening labor market and supporting the main findings of our recently released State of the U.S. Labor Market report as well as the last episode of the Consumer Says podcast
• Inflation is within striking distance of the Federal Reserve’s 2% target – Year-over-year inflation was 2.09% in September as measured by the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred measure of inflation. Although topline inflation continues to cool, core inflation jumped up driven by services categories.
• Despite early signs of softening, the U.S. economy is still strong. 3rd quarter GDP was 2.8%, down somewhat from the previous quarter but still quite robust (for context, that is slightly above the 2014-2019 pre-pandemic average of 2.6%). Unemployment remains historically low at 4.1% and much of the bad news from the recent jobs report was driven by fallout from hurricanes.
• Most expect a 25 basis point interest rate cut by the Fed this Thursday. Last week’s jobs and inflation numbers gives the Fed the green light to continue to ease their monetary policy.

Consumer says...

Although by many measures the U.S. economy continues to be remarkably strong, many consumers, and by extension voters, are still dissatisfied. Our Index of Consumer Sentiment remains below its pre-pandemic averages, but is on the rise in part thanks to easing inflation. How does this all play into voters’ decisions this Election Day? We sat down with the Head of U.S. Political Analysis Cameron Easley to discuss all things the election and the economy. ICYMI – we published a whole report on the U.S. Election and Economy in September.

Head to our Youtube or Spotify channels to hear the whole conversation with Cam. If you’re short on time, here’s a brief summary of the main topics of discussion:

Q: Where do the polls stand between the two presidential candidates?

A: It's a very close race, with polling errors making any outcome possible in key battleground states.

Q: How does the economy factor into voter preferences?

A: The economy is a top issue, but its impact depends on clear contrasts between candidates' handling of it which we saw between Joe Biden and Donald Trump but has changed in recent months as Kamala Harris ascended to the top of the Democratic ticket. 

Q: Do voters care more about overall trust or specific economic policies?

A: Both matter; voters focus on personal economic impacts like inflation and prices, but policy details can sway undecided voters.

Q: As you mentioned earlier, voters trusted Trump much more on the economy than Biden, but Harris has managed to close that gap. Is that because she is the Vice President and can escape association with “Bidenomics” or has that been a result of her proposed policies and campaigning?

A: The fact that Kamala Harris wasn’t Joe Biden was enough to create an immediate vibe shift – when she took over on the ticket, trust in the Democratic candidate jumped up immediately before any campaigning began. At the same time, it isn’t entirely vibes, she’s gained traction on specific issues that she’s campaigned heavily on as of late (price gouging, calling Trump’s tariffs a tax increase, etc.).

Q: We get the question “how will the election affect the economy” but a lot hinges on the results of the House and Senate races. How are those races playing out in the polls?

A: Right now the most likely outcome looks to be a Republican Senate majority, with the House majority being dictated by whichever party wins the presidency. In other words, if Harris wins she’s likely to have a divided Congress but if Trump wins he’s likely to have a Republican trifecta, which would make it easier for him to pass his economic policies. 

Further reading:

• On the other side of the election sits the 2024 holiday season. Major shopping events Black Friday & Cyber Monday are quickly approaching, but gift buying has already begun. Read our preview of holiday spending trends here!
• Plus, as the overall labor market cools, certain groups have already been experiencing unequal conditions at work. Last week we published a special report on the workforce gender divide, and how parenthood exacerbates the gap in employment outcomes for male and female employees.

Stay tuned! We'll be back discussing the latest econ news and our own insights on another episode on November 20.