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Falling stock prices, increasing unemployment, and escalating tensions in the Middle East threaten to end the Kamala Harris momentum and may pave the way for Donald Trump’s return to the White House.
Democratic strategist David Axlerod describes the enthusiasm surrounding Vice President Harris’ campaign as a reflection of “irrational exuberance.” He’s correct; up to this point, she has relied largely on media attention while steering clear of substantial policy debates. In light of the current global instability, this tactic cannot persist.
Amid current uncertainties, it’s imperative for Kamala Harris or Joe Biden to communicate with the American populace. However, they have yet to do so.
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The global stock markets are experiencing significant declines for several reasons:
1. The U.S. economy is slowing down, with unemployment increasing, suggesting a potential recession.
2. Iran poses threats against Israel, raising concerns about an expanded conflict in the Middle East.
3. The United States is without effective leadership, as neither Joe Biden nor Kamala Harris can offer the reassurance or solutions that Americans desperately need during these trying times.
The U.S. stock market has suffered sharp declines, resulting in over a trillion dollars in losses for investors. This downturn is not isolated; Japan recently faced its most significant trading drop since the 1987 global market crash. Additionally, the VIX, Wall Street’s “fear gauge,” has reached one of its highest statuses in history.
Indicators have suggested for months that the U.S. job market is deteriorating. Despite still low unemployment claims, they have been rising, wage growth is stagnant, and job openings have significantly decreased. Just last Friday, the government announced the economy added only 114,000 jobs, far below the anticipated 175,000. In response, Goldman Sachs’ economists have increased the likelihood of a recession occurring in the next year from 15% to 25%. While still relatively low, experts agree the risks are growing.
This situation presents a complex challenge for Vice President Kamala Harris. The Biden-Harris administration has consistently boasted about job creation and low unemployment as their primary achievement; in 2023, unemployment dropped to 3.4%.
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However, it recently rose to 4.3%, with some economists believing this surge could signal the beginning of a recession. Historically, unemployment tends to rise by at least half a percentage point in the early months of downturns; as economist Ed Hyman at ISI Evercore frequently points out, “Everything is fine until it isn’t.” This means hiring can remain strong until it drastically declines.
Federal Reserve Chair Jay Powell has been attempting to navigate this situation cautiously. He aims for a “soft landing,” seeking to slow the economy and tame inflation by sharply raising interest rates since September 2022. This balancing act is notoriously difficult, partly due to the long-term effects of monetary policy.
FILE – U.S. Federal Reserve Chair Jerome Powell answers a question from David Rubenstein (not pictured) during a discussion at a meeting of The Economic Club of Washington, at the Renaissance Hotel in Washington, D.C., U.S., February 7, 2023. (REUTERS/Amanda Andrade-Rhoades/File Photo)
Inflation reached a peak of 9.1% in June 2022 but began to decrease as supply chain issues subsided and China’s economy slowed, reducing demand for various commodities, including oil. By January, the consumer price index had fallen to 3.1%, suggesting that Powell’s stringent measures were effective. However, inflation began to increase again in the spring, prompting the Fed to pause in executing interest rate cuts.
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This pause has sparked controversy. Many, including notable Democrats like Elizabeth Warren, express frustration over Powell’s decision not to reduce rates sooner. They are acutely aware of how detrimental a recession could be to Harris’ campaign.
It’s likely that Kamala Harris will attempt to shift responsibility for any economic downturn that materializes. What alternative does she have if the economy experiences a decline?
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What will unfold? Kamala Harris’ economic strategies remain unclear. There is currently no official campaign platform outlining her stances on vital issues. Since her introduction to the race by influential Democrats, she has yet to grant an interview or hold a press conference. Her limited unscripted comments have led many voters to long for Joe Biden’s return.
What is known is far from reassuring. She has stated regarding one economic initiative of the Biden-Harris administration: “We allocated an additional $12 billion to community banks because we recognize that community banks serve the community.”
When asked about inflation in several interviews before being named the Democratic Party’s 2024 nominee, Harris provided perplexing generalities about the White House’s serious approach to rising prices, repeatedly stating it was being taken “very seriously.” Yet, no tangible solutions were proposed, even as she affirmed multiple times that “Bidenomics is working.” Following the disappointing jobs report, the Harris campaign seemed to blame Donald Trump, who has been out of office for over three years.
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Kamala Harris appears to favor large government solutions, partnering with President Joe Biden to pass trillions in unnecessary spending measures that have driven prices sky-high and our fiscal deficits to unprecedented levels. She has also aligned with Biden in misrepresenting the economic situation they inherited, claiming it was in free fall; in reality, it was growing at over 6% with inflation below 2%.
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Neither she nor President Joe Biden has acknowledged that government spending is excessively disproportionate to historical standards; their solution to address deficits is not to reduce expenditures but to raise taxes. According to the Tax Foundation, Harris advocates for “steeper” tax increases and more extensive redistribution through the tax system than President Biden.
During her 2019 campaign, Harris supported several progressive proposals, including the Green New Deal, Medicare for All, and a ban on fracking and offshore drilling—positions she has since largely distanced herself from. She often engages in class warfare rhetoric when it suits her, criticizing tax reductions for the wealthiest and adhering to the progressive (and inaccurate) narrative that inflation is primarily a result of corporate greed.
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Some insights may stem from Kamala Harris’ father, a “proudly Marxist” economist whose research critiques “the risks of depending on profit-driven capitalists to manage an economy.” Has Kamala adopted any of her father’s perspectives?
Answers remain elusive, but she will soon have to clarify her position. This uncertainty could mark the conclusion of Kamala Harris’ initial phase of support.
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