Inflation has become a major concern for voters ahead of the 2024 presidential election, with 76% of registered voters citing it as a major factor in their choice for president. The rate of increase in the price of goods and services has made it harder for Americans to save and has hollowed out many wallets. During the Trump administration, inflation averaged 1.9% a year, but it is on track to average 5% a year during the Biden administration. This increase has led to higher prices for housing and groceries, making it more difficult for Americans to afford basic necessities.
The challenge of inflation is not just economic but also political. Once prices go up, they rarely come down, leading to reduced economic activity and lower growth. The Federal Reserve aims for a 2% inflation rate and has been trying to achieve a “soft landing” for the economy. Former President Trump has blamed the Biden administration for high inflation, reaching a 40-year high of 8% in 2022. Trump has expressed interest in having more control over how the Federal Reserve sets interest rates but has stated he would not fire Fed Chairman Jerome Powell before his term ends in 2026.
President Biden signed the Inflation Reduction Act two years ago, aimed at lowering drug prices and encouraging investments in climate and domestic energy. Republicans argue that government spending under the Biden administration has worsened inflation. The Biden administration has acknowledged the impact of inflation on housing, groceries, and medication and has sought to ease the financial burden on Americans. Vice President Harris has proposed plans to help first-time home buyers and tackle price gouging at grocery stores as a way to address the effects of inflation.
Economists point to supply chain disruptions and higher labor costs as factors contributing to higher prices at grocery stores. Harris’s proposal to offer up to $25,000 in assistance for first-time home buyers has raised concerns about potential price increases in areas where a significant portion of buyers receive assistance. Trump has criticized the Biden administration for record-high inflation but has offered few proposals on lowering prices. He has proposed imposing tariffs on Chinese and foreign goods, although the specifics of these tariffs are still uncertain.
A report by Moody’s Analytics predicts that a Republican victory in the 2024 election would lead to an increase in annual inflation rates, while a victory for Harris and a divided Congress would result in lower inflation rates. The impact of inflation on the economy and consumers remains a critical issue for voters as they consider their choices for the next president. The candidates, including Trump and Harris, will need to address this issue and propose effective strategies to tackle inflation and its consequences on the American economy.
