This fundamental issue for American voters “weighs on the collective psyche”

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 New York Times poll /Siena College judge that the economic situation is “bad“.

Because, after three years of high inflation, ““high prices hurt people’s wallets and that’s really what’s weighing on consumer confidence, although the indicators are strong.”explains to AFP Joanne Hsu, director of the University of Michigan’s monthly survey on consumer confidence. Prices are in fact more than 20% higher than they were at the start of 2020. “Just 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 declared Friday in Augusta (Georgia).

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“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 don’t feel like they’re thriving in this economy is a real challenge 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 say Kamala Harris is “better for the economy”, against 38% for Donald Trump. The same survey in July, when Joe Biden was still a candidate, showed a lead for Donald Trump on this question, with 40% to 35%.

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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 household purchasing power is actually better (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.

“Buying a home 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 real estate loans.

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 figuresmask massive variations”with employment growth “highly concentrated in only a few sectors”tells AFP Julia Pollak, chief economist for the job advertisement site ZipRecruiter. For voters, the famous “American dream” is shaken.