The first debate between Vice President Harris and former President Trump is expected to be more heated than post-pandemic inflation, a major theme of the upcoming presidential election.
The Trump campaign has continually criticized Harris and President Biden, who dropped out of the race in July, over high inflation as the economy continues to recover from the coronavirus pandemic.
Inflation peaked at 9% in July 2022, and although annual inflation finally dipped below 3% in July, Americans have felt the pain of rising prices and borrowing costs that have eaten into savings made during the pandemic.
Ms. Harris and Mr. Biden have sought to highlight the administration's role in the economic recovery, efforts to crack down on price gouging and legislative achievements such as the Curb Inflation Act. Mr. Biden has trailed Mr. Trump in public opinion polls on his management of the economy, but he and Ms. Harris are split in the polls.
Trump Leading the Vice President by 2 to 1 A CNBC national economic survey released last month found Harris among the candidates most trusted on economic policy, but a Financial Times/University of Michigan Ross School of Business poll released a few days later found her slightly ahead of Trump when asked which candidate respondents trusted to manage the economy.
As partisan rhetoric on the economy is expected to fly across the stage Tuesday night, here are four numbers to keep in mind.
Inflation rate: 2.9%
of Consumer Price Index (CPI) is a broad measure of the prices of goods and services in the economy. The annual pace of increase in the CPI, along with other similar measures, is colloquially referred to as inflation.
The Federal Reserve tries to keep inflation at 2 percent per year because it believes that some inflation is generally a good thing and indicates strong economic activity. However, problems arise when inflation rises much above 2 percent because the money households bring home may not be enough to cover their regular expenses.
This happened in the aftermath of the pandemic, following an economic shutdown that created shortages of labor and materials. Prices started to rise due to rising input costs, and then some companies used the rising costs as an excuse to further increase their profit margins. To what extent this expansion of profit margins reflects new psychological norms for consumers is debated among economists. Some suggest that a good way for consumers to resist this might be to buy less.
Although “inflation” is always demonized in political discourse and politicians try to use it to their advantage, it is not accurate to attribute it to a single economic factor. The inflation spike from 2021 to 2022 was global and can only be attributed to the pandemic itself. Since 2022, CPI inflation has fallen to 2.9% per year, still high but becoming less and less noticeable.
GDP growth: 3%
Gross domestic product GDP is the output of the entire economy. If you think of it as a business, it's like the profit margin of the entire economy. More specifically, it's the value of what the government buys, invests, spends, and exports to other countries.
The U.S. economy is booming amid its recovery from the pandemic, which is likely responsible for some of the inflation the U.S. has experienced. The economy rose to a 17% annualized expansion in the second quarter of 2021, still above its long-term trend of roughly 5% seasonally adjusted annual growth in the decade that ended in 2020. GDP in the second quarter of this year was 5.9% by that particular measure.
Voters and consumers don't “feel” GDP the way they “feel” prices or salaries. But a strong economy overall can lead to decent wages and good employment levels. Average hourly wages for non-managerial workers have risen 25% since 2020, while the CPI has risen only 20%.
Unemployment rate: 4.2%
The unemployment rate is calculated by dividing the number of unemployed people by the labor force. Currently, about 7.1 million people out of a labor force of 168.5 million are unemployed.
That brings the unemployment rate to 4.2%, which, while low in absolute terms, is up from the recent low of 3.4% in April 2023. The unemployment rate as a data point has a lot of inertia, meaning that once it starts to rise, it can be difficult to slow it down.
That was a concern in July, when the unemployment rate rose to 4.3%, previously a reliable indicator of recession, and raised fears that a recession was coming. But in August, the unemployment rate fell to 4.2%, indicating that while the unemployment rate is down from its record low, it is not trending upward.
National debt: $35 trillion
The national debt has been rising since the early 2000s and has in recent years reached uncharted territory that has economists and lawmakers on both sides of the aisle nervous.
The national debt surpassed $35 trillion for the first time in July, eight months after passing the $34 trillion milestone and nearly a year after surpassing the $33 trillion mark.
It's ready Over $50 trillion That will happen by 2034, according to nonpartisan federal forecasters at the Congressional Budget Office (CBO).
The CBO Main driving force Most of the increase in the national debt over the next few years will come from federal health care programs such as Social Security and Medicare. Republican and Democratic Party Policy Platform The Fed has pledged not to cut interest rates and will set interest rates consistent with its politically independent mandate to maintain 2 percent year-over-year inflation and maximum employment.
The growing national debt, partisan conflict over the debt ceiling, and a “steady decline in governance standards over the past two decades” combined to lead ratings agency Fitch to downgrade the United States' credit rating last summer. Another rating agency, Moody's, changed its outlook on U.S. government debt to “negative” from “stable” last fall, citing the costs of high interest rates and political polarization.
