The American economy is showing unexpected strength and job creations again exceeded expectations in September but, while the subject is crucial less than a month before a very close election between Kamala Harris and Donald Trump, voters remain not very optimistic.
Inflation is slowing, the much-heralded recession has not occurred, consumption remains solid, the strength of the job market continues to surprise… And yet, almost half of the people questioned for a survey New York Times / Siena College published Tuesday consider the economic situation to be “bad”.
Because, after three years of high inflation, “high prices hurt people’s wallets and that’s really what weighs on consumer confidence, although the indicators are solid,” Joanne Hsu, director of the University of Michigan’s monthly consumer confidence survey.
Prices are in fact more than 20% higher than they were at the start of 2020.
“The simple fact of seeing prices rise regularly takes a toll on the collective psyche, particularly for low- and middle-income households,” analyzes Ryan Sweet, economist for Oxford Economics.
Priority of voters
Republican candidate Donald Trump regularly tugs on this nerve to seduce voters, highlighting 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 power, inflation will skyrocket,” he insisted on Sunday at a meeting in Juneau, Wisconsin, promising that conversely, if he wins the election, “From the first day 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 do not have the impression of prospering in this economy is a real difficulty for the ruling party,” notes Joanne Hsu.
The Democratic Party, however, seems to be convincing a little more on the economy since Kamala Harris is a candidate, after the withdrawal of Joe Biden in July.
A University of Michigan poll released September 20 shows 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 a lead for Donald Trump on this issue, with 40% to 35%.
American dream
Kathy Bostjancic, chief economist for Oxford Economics, also highlights a study from the Congressional Budget Office (CBO), an independent organization, which showed in May “that the purchasing power of households is in fact better (today today) than it was in 2019.”
Salaries have in fact been higher than inflation since May 2023. But this is 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 house is incredibly less affordable today than before the pandemic”, underlines Kathy Bostjancic, between prices which have soared and interest rates “still well above 6%” for loans real estate.
Inflation has certainly slowed down 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, on which pensions are indexed. And the objective of 2%, considered healthy for the economy, is not very far away.
In September, the unemployment rate also fell slightly to 4.1% and job creation was well above expectations.
But these figures “hide the massive variations”, with employment growth “highly concentrated in only a few sectors”, tells AFP Julia Pollak, chief economist for the job advertisement site ZipRecruiter.