US Election 2024: Revealing the Health of the Economy

The economy has always been one of the top concerns for voters in U.S. presidential elections. In an ABC News/Ipsos poll in May, nearly 90% of respondents said the economy was the most important issue in determining who would receive their vote in November.

US Election 2024: Economy (Source: Financial Times)

The US economy will be a central topic in the first debate between the two candidates (incumbent President Joe Biden and former President Donald Trump) today (June 27, local time).

The two candidates in this year's White House race have completely opposite views on the economy.

Here's a glimpse into a part of the world's largest economy that might interest voters:

Unemployment: Low, but with warning signs ahead.

The US unemployment rate remained below 4% for 27 months – the longest streak ever and on par with the period in the 1960s. However, in May 2024, the unemployment rate rose from 3.9% to 4%.

At the same time, the number of jobs in the US recently fell to a new three-year low – another sign that the labor market is cooling down. This means job seekers may find it more difficult to get hired.

In particular, the job market for recent college graduates is weakening. In May 2024, the unemployment rate for those with bachelor's degrees aged 20 to 29 was over 12%, up nearly 4% from a year earlier – according to data from the U.S. Bureau of Labor Statistics.

Inflation: Cooling down

Inflation slowed more than expected in May 2024, falling to 3.3% from 3.4% in April. For comparison, it was 4% at this time last year and 9% two years prior.

In particular, inflation remains more than double the average rate of 1.5% in the seven years prior to the Covid pandemic and significantly higher than the Federal Reserve's 2% target, when viewed through the lens of a slightly different metric: the personal consumption expenditures price index based on GDP.

However, according to Nanette Abuhoff Jacobson, global investment strategist at Hartford Funds, in the US, the lowest-income consumers are actually struggling with inflation, and those with higher incomes are also spending cautiously.

Evidence of this is the data from the US Department of Commerce showing that retail sales increased by only 0.1% in May 2024. This data is significantly lower than expected. Previously, economists had predicted that retail sales in the previous month would increase by 0.3%.

The New York Fed reports that consumers are also taking on more debt but are increasingly failing to pay on time. Notably, the percentage of severely overdue credit card balances (90 days or more overdue) has risen to its highest level since 2012.

Housing: Still unaffordable

House prices are at record highs and have risen for 11 consecutive months, while the housing shortage persists.

Average 30-year fixed mortgage interest rates have recently reached their highest levels of the year. Although they have begun to decline, mortgage rates remain higher than any levels seen in the decade prior to 2022.

Such high mortgage interest rates are partly due to inflation exceeding the Fed's 2% target. As a result, the central bank has delayed cutting interest rates. In turn, many homebuyers will have to rent for longer periods than usual, which also drives up rental prices.

According to a Reuters/Ipsos poll conducted over three days (June 22-24), voters remain divided on the candidates' approaches to the two top issues facing America.

Biden's approval rating has risen slightly from 36% in May to 37% in June. Many Democrats are concerned that Biden could be affected by voter anxieties about his age, as well as internal party opposition to his support for Israel's war against Hamas.

At 81 years old, Biden is the oldest US president to hold this office.

When asked which of the two candidates handled economic issues better – voters' number one concern – Trump's approval rating was 43%, while Biden's was 37%.

American voters remain influenced by years of rapidly rising consumer prices, even though inflation has slowed considerably in recent months and the unemployment rate has been below 4% for more than two years.

Source: https://baoquocte.vn/bau-cu-my-2024-he-lo-suc-khoe-nen-kinh-te-trong-tam-cuoc-ti-thi-dau-tien-cu-tri-nghieng-ve-ong-trump-276511.html