US Election 2024: Revealing the health of the economy

The economy is always one of the top issues voters care about in US presidential elections. In an ABC News/Ipsos poll in May, nearly 90% of respondents said the economy was the most important issue in deciding who would get their vote in November.

US Election 2024: Economy (Source: Financial Times)

The US economy will be the focus of 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 race for the White House have completely opposite views on the economy.

Here's a look at one part of the world's largest economy that could interest voters:

Unemployment: Low, but warning signs ahead

The US unemployment rate has remained below 4% for 27 months – the longest streak ever and on par with 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 labour market is cooling. That means job seekers may find it harder to get hired.

The job market for recent college graduates is particularly weak. In May 2024, the unemployment rate for bachelor’s degree holders aged 20 to 29 was above 12%, up nearly 4% from a year earlier, according to data from the US 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% this time last year and 9% two years ago.

In particular, inflation remains more than double the 1.5% average rate over the seven years before the Covid pandemic and significantly above the US Federal Reserve's 2% target, when viewed through the lens of a slightly different measure, the GDP-based personal consumption expenditures price index.

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

As evidence, data from the US Department of Commerce showed that retail sales increased by only 0.1% in May 2024. This data is significantly lower than expected. Previously, economists predicted that retail sales would increase by 0.3% last month.

Consumers are also taking on more debt but increasingly falling behind on payments, the New York Fed said. Notably, the share of credit card balances that are seriously delinquent (90 days or more past due) rose to the highest level since 2012.

Housing: Still Unaffordable

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

The average 30-year fixed mortgage rate recently hit its highest level in a year. Although it has started to decline, mortgage rates are still higher than any seen in the decade leading up to 2022.

Mortgage rates are so high in part because inflation is running above the Fed’s 2% target. As a result, the central bank has held off on cutting rates. In turn, many homebuyers will have to rent for longer than usual, which also drives up rents.

Voters remain divided on the candidates' approaches to the two top issues facing the United States, according to a Reuters/Ipsos poll spanning three weeks (June 22-24).

Biden’s approval rating has increased slightly from 36% in May to 37% in June. Many Democrats worry that Biden could be hurt by voter concerns about his age and opposition within the party over his support for Israel’s war against Hamas.

At 81, Mr. Biden is the oldest US president to hold the position.

When asked which of the two candidates has a better handle on the economy - voters' number one concern - 43% said Trump supported the economy, while 37% said Biden did.

American voters remain affected by years of rapidly rising consumer prices, even though inflation has slowed significantly 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