Vice President Kamala Harris is facing a critical question as she moves closer to securing the Democratic presidential nomination: Can she leverage the economic achievements of the Biden-Harris administration to her advantage, a task that President Joe Biden struggled with?
The administration oversaw a robust recovery from the pandemic-induced recession, resulting in a significant drop in the U.S. unemployment rate to a 50-year low of 3.4% in early 2023, down from 6.4% when Biden and Harris assumed office in 2021. This period also saw the unemployment rate stay below 4% for an extended period, the longest since the 1960s.
The administration's $1.9 trillion stimulus package fueled strong economic growth, leading to a surge in demand for workers and subsequent wage increases, particularly benefiting lower-paid workers and narrowing income inequality.
However, challenges emerged as supply chain disruptions caused parts shortages, coupled with the impact of Russia's invasion of Ukraine on gas and food prices. Inflation spiked to a four-decade high in June 2022, offsetting much of the wage growth and dampening public sentiment towards the economy.
Americans continue to grapple with the disconnect between positive economic indicators such as job growth, falling inflation, and overall economic expansion, and their perception of the economy. The cumulative increase in average prices over the past three years, along with concerns about the country's direction, has contributed to this sentiment.
Former President Donald Trump has been vocal about the rising cost of living, emphasizing inflation in his recent speeches. Housing affordability has worsened, with both prices and mortgage rates significantly higher than three years ago, making it challenging for many would-be homebuyers.
While the Federal Reserve's aggressive interest rate hikes have helped curb inflation, borrowing costs have risen sharply, impacting consumer and business loans. Despite the Fed's efforts, many Americans are still feeling the pinch of high costs, particularly in major purchases like cars and homes.
Economists note that while average wages have increased to offset higher costs, overall household income growth has not kept pace with hourly pay, leading to concerns about income stagnation for a significant portion of the population.
In conclusion, Vice President Harris faces the task of navigating these economic challenges to secure the Democratic nomination and address the concerns of Americans grappling with the impact of inflation and rising costs.
