The U.S. inflation rate soared once again to its highest point in over four decades under President Joe Biden. This time, it peaked at 9.1% in 2022. Since then, the yearly rate has come down considerably to only 2.9%, because of a series of Federal Reserve interest-rate hikes.
However, it’s still above the Fed’s target rate of 2%. Even if Kamala Harris served under Biden during a stressful period of high inflation, plenty of Americans, and even some economists, are quite confident in her ability to bring inflation down if she beats ex-President Donald Trump in next month’s presidential election.
According to the latest GOBankingRates survey conducted on 1,004 U.S. adults, Harris gets higher marks than Trump, especially when asked who they believe could do a better job at tackling inflation as president. Here are the results you should know about:
- Harris: 43.63 %
- Trump: 39.44 %
- Either: 2.99 %
- Neither: 7.87 %
- Don’t know: 6.08 %
If there’s one thing that these results are showing, is that Harris has mainly avoided blame for the high inflation on Biden’s watch. And as Forbes noted in one of his most recent analyses, inflation increased by 19% over the first 42 months of Biden’s term vs. 6% during Trump’s first 42 months.
Moreover, some economists are extremely hopeful that Kamala Harris will be as effective as expected when it comes to bringing prices down. Suppose she manages to make the right decisions. Nevertheless, here’s why Americans feel like they can trust Harris to lower their inflation:
She won’t make any rash decisions
Kamala Harris knows very well what’s at stake when it comes to the economy. If she won’t be able to figure out an efficient way to corral inflation, she and her advisors will probably seek to pursue a more moderate path to solving the issue.
According to Chuck Warren, political economist and host of “Political Podcast”, “inflation dynamics are mainly influenced by consumer and business confidence.” He also added that if the Harris administration finds a way to effectively smooth the transition and communicate its future intentions in a transparent fashion, it could easily maintain or bolster confidence, hence stabilizing inflation.
Alan Andrews, a renowned commercial finance specialist at KIS Finance, also told GBR that inflation might increase if Kamala Harris decides to keep low interest rates in order to focus on economic expansion. But if Harris takes the high route and chooses to be more circumspect, advocating for steps to rein in inflation, then the Feds could adjust its policy accordingly.
She will battle anti-competitive practices
CBS News also reported that Harris prefers enacting the first federal law against price gouging by various food suppliers and grocery stores. The idea is mainly based on data, proving that some food companies have seen record profits even if they’ve blamed inflation for skyrocketing grocery prices.
According to Dan Scheitrum, a highly-appreciated professor of agribusiness at California Polytechnic State University, San Luis Obispo, Harris’ plan to crack down on any potential anti-competitive practice in the food sector could easily lower prices for some household staples.
In case of price, fixing takes place and it ultimately gets addressed, we should expect to undo some of the price increases. Not everyone is sold on that particular idea.
There are plenty of reasons why the high inflation we dealt with for the past years took place, but aggressive and unfair pricing practices sit at the very bottom of the list for a good reason. It could have been more of an issue back when supply chains were highly disrupted by the pandemic, but nowadays, it’s even harder to point to any significant, meaningful examples of price gouging.
She will avoid tariffs
Some economists out there warned that inflation might get worse if Trump wins a second term. That’s mainly due to his proposals to raise tariffs and crack down on anything related to illegal immigration. Both of these could potentially push the prices even higher, as the Wall Street Journal reported.
As Bernard Baumohl, chief global economist at the Economic Outlook Group, explained to the Wall Street Journal, “There’s a real risk that inflation could accelerate under a Trump presidency.”
He also added that such a trend might convince the Fed to set interest rates even higher than before, especially if inflation continued on its current downward trajectory. In comparison, Harris has often criticized Trump’s relentless support of higher tariffs, and it’s unlikely for her to adopt a similar policy if she becomes president.
Inflation is already heading in the right direction
There’s one thing we know for sure: inflation rates have considerably decreased over the last couple of years, so Harris doesn’t have as much work to do to bring it down further than she would have two years ago.
Another important step she could decide to take if elected president is to try to inspire more confidence that she can, in fact, keep economic matters under control. Inflation isn’t just monetary expansion, it is, in fact, a multifaceted phenomenon driven by plenty of factors, like political stability and policy direction.
A likely transition from Biden to Harris might occasion some sort of short-run volatility, but it will most likely not have a huge impact on future trends of inflation if managed effectively. The main idea is to stick to clear communications backed up by steady hands-on economic policy.
In the meantime, inflation is still by far the most important economic and financial issue in the 2024 election cycle, as the GBR survey has shown. Here’s exactly how respondents gauged 5 different issues, depending on their importance:
- Inflation – 49.20% of respondents
- Social Security and Medicare – 26.89%
- Government spending – 9.06 %
- Healthcare costs – 7.97 %
- Unemployment – 6.87 %
Moreover, any American who is even slightly concerned about inflation should be definitely more concerned about Trump than Harris. She is way more serious about fighting inflation and helping households cope with higher costs of living.
On top of that, Trump’s plan to impose difficult tariffs on all imported goods could significantly push up prices and hit consumers quite hard, especially less wealthy consumers. If Trump gets elected and starts implementing his tariffs and any other plans, inflation could probably rise to an uncomfortable 6% to 9.3% per year.
The prices could also climb a very painful 20% to 28% during Trump’s four years in office. That would imply there’s a high chance that inflation could rise more in a second Trump term than it has under President Joe Biden.
Moreover, economists also think that higher prices caused by Trump’s tariffs could cost the typical American household somewhere around $3,900 a year. That’s too much.
Allegedly, the first factor for the inflation surge was the pandemic, which shut down thousands of factories all over the world and disrupted many supply chains, causing prices to dramatically soar.
The second factor was Putin’s war against Ukraine, which pushed up agricultural prices all over the world because Ukraine is the biggest grain and fertilizer exporter. The war also caused oil and gas prices to soar, especially since Russia is a huge energy exporter and the war disrupted all energy exports.
There was another important factor behind inflation. Many corporations out there took advantage of the situation by raising their prices way higher than was needed. This type of “greedflation” jacked up important corporate profits while also hammering consumers.
The Economic Policy Institute, a very progressive think tank, declared that these moves meant to boost corporate profits only caused one-third of the growth in prices since the pandemic began.
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