Kamala Harris is running for president on two economic platforms. The first is the record of the Biden-Harris administration. The second is her own set of prescriptions for fixing what voters don’t like about the Biden-Harris record.
It might just work. The vice president enjoys lucky timing, given that the biggest economic woe of the Biden years—inflation—is getting back to normal just as crucial undecided voters are making up their minds. And Harris’s own plans are clearly meant to plug the holes where voters think Biden failed.
On paper, the economy seems headed for the “soft landing” economists have been hoping for. Inflation continues to moderate, with the July inflation rate coming in at 2.9%, the lowest since March 2021. Inflation has dropped sharply from the peak of 9% in June 2022, suggesting the Federal Reserve’s sharp interest rate hikes have worked as intended to curtail rising prices. Investors now think it’s nearly certain the Fed will start slowly cutting interest rates in September, giving borrowers a much-needed break.
Consumer spending is holding up. Retail sales in July were much stronger than economists expected, led by robust car sales. The latest data basically erases worries that popped up after a spotty jobs report for July showed signs of weakness. A mini market panic followed in early August. But that sell-off has completely reversed, with stocks up for the month, as investors decide maybe everything is fine after all.
Here's a roundup of recent insights from leading forecasters:
Conference Board, Aug. 16: “Welcome to the soft landing.”
Capital Economics, Aug. 16: “The data released this week was all consistent with a soft landing.”
Goldman Sachs, Aug. 14: “We expect a modest growth pickup in [the second half] reflecting consumer spending growth, easing financial conditions, and rebound in inventory investment.”
Needless to say, all of this is not enough. Consumers remain gloomy, miffed about rents and food prices that are still elevated, high interest rates that make big purchases unaffordable, and chronic burdens such as costly child and medical care. This is where Harris now offers a reboot, promising to fix what Biden apparently couldn’t.
Harris’s economic plan would tackle housing affordability with a new $25,000 tax credit for first-time buyers and incentives to add 3 million new homes to the national supply. She’d give Americans a break on medical debt and back a $6,000 tax credit for families with newborns. She also wants the government to ban “price gouging” on groceries and go after food conglomerates that supposedly extort shoppers.
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Biden backed similar policies, but got no love from voters for ongoing efforts to bring prices down. The biggest moves require congressional legislation, which Biden can’t get since opposition Republicans control the House of Representatives. Harris would face the same problem, unless she won with Democrats in full control of Congress, which is a slim possibility. So Harris may be no more able than Biden to address cost imbalances that still nag voters.
Yet Harris seems to be getting a sort of grace period Biden didn’t. In one eye-opening poll, voters ranked her higher than both Biden and her Republican opponent Donald Trump on her handling of the economy, even though Harris has no record at all on the national economy, except for Biden’s. Respondents in that poll indicated that they trust Harris more than Biden because they'd expect her to pursue different policies than Biden if she won the presidency.
So Harris now has to convince voters that she’s Not Joe Biden. The reality is that she’ll probably turn out to be quite similar to Biden on big issues involving taxes, healthcare, energy, and regulation. But that’s not the way to win in 2024.
While Biden was still campaigning, he routinely bragged about everything going right in the economy: strong job growth, declining inflation, buoyant spending, a rising stock market. His low approval ratings reveal that voters gave him no credit for it. Yet that solid economic underpinning now allows Kamala Harris to precision-target the economic irritants Biden couldn’t quite extinguish. It’s not a bad one-two punch.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on X at @rickjnewman.
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