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September 19, 2024 - 5:30pm
As she enters the home stretch of her campaign for the presidency, Kamala Harris is still dogged by two issues on which she’s seen to be weak: immigration and the economy.
Spreading the rumour of immigrants eating domestic pets was a clumsy attempt by Republicans at getting immigration back on the agenda. It has so far not worked in their favour. That leaves the economy, on which voters still narrowly favour Trump over Harris, blaming her administration for the soaring inflation of the last couple of years. On Wednesday, when the Federal Reserve cut interest rates by half a percent and signalled that the economy was in a good place, this no doubt hurt the GOP too.
Needless to say, the timing is unfortunate for Trump. It’s always possible that the prospects of a second Trump administration, whose inflationary policy proposals would make life difficult for the US central bank, weighed on the minds of Fed governors as they made their decision. Perhaps that is why the former president yesterday suggested the Fed’s decision was “political”. But a rate cut was imminent, and the timing of the move was not political.
It does, however, bolster Harris’s narrative — that she and Joe Biden inherited an economy in bad shape amid the Covid-19 pandemic, restored it to health, and can now look forward to better days. That, in short, was the message Fed chairman Jerome Powell delivered at his press conference immediately after the meeting that made the rate cut decision: that inflation has come down but the economy remains healthy.
There are two ways Trump can still try to spin this to his advantage — both of which he has tried, neither with much success. The first has been to say the Fed is working for Harris, an argument that resonates only with the most partisan backers who are already going to vote for him.
The second, potentially more effective line of attack has been to say that a half-point rate cut, which was deeper than many had been expecting, suggests the economy is in even worse shape than anyone thought. But both Powell’s favourable evaluation of the economy in his presser, and the strong rally in markets that followed the next day, made that claim look doubtful. For now, with investors in almost all asset classes growing richer by the hour and credit charges set to fall, Americans might be persuaded that better days are coming.
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SubscribeAll of this is nonsense and demonstrates the author’s profound disconnect with voters. No one is reading the Wall Street Journal today and jumping for joy about rate cuts. People care about the impact rate cuts have on their personal lives. Any benefits or drawbacks from rate cuts won’t have an impact until after the election. It will have zero impact on voting intentions.
Same thing with cat eating and immigration. No one gives a crap about people eating cats. If you love Trump, you agree with him. If you hate Trump, you think he’s racist. Meh. By now, the issue does more to accentuate the histrionic hatred the regime media has for Trump.
Ah come on, another ho hum mindless economic article from unherd. Dont have time to explain thst asset inflation is inflation, the underestination of inflation undermines gdp , forcing house prices higher is bad for family formation. Come on…jesus, think outside the box a bit
Asset inflation feeds indirectly into the cost of living which is what is commonly meant by inflation. Take interest rate cuts: these yield lower mortgage payments on average but increase the price of houses and newly minted mortgages. Feed through into higher mortgage payments therefore takes some time as long as interest rates remain low.
Fed were well.behind the curve. JOLTS data not worth the paper it’s written on (viz multiple revisions of most Fed data). US has been in early stage recession for some time and now unavoidable. So maybe a political calculation, but a late economic one as well. Meanewhile, i will focus on liquidity for investment purposes. Yellen’s monetisation of ST paper and QT. Financial repression a bigger watchout then interest rates at this point imo. .
I could have saved you some ink. Of course, the rate cut is political.