For voters, two of the biggest economic issues heading into the final stretch of the 2024 presidential election are inflation and job growth. Those two issues present a mixed bag for Vice President Kamala Harris, the Democratic nominee. Inflation has fallen sharply from its 2022 peak under the Biden-Harris administration, though job growth remains a concern.
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Many economists are cautiously optimistic about the direction of the economy. If nothing else, there is optimism that the worst-case scenarios are off the table — at least for now. And the economic proposals Harris recently unveiled have calmed the nerves of some economists who were uncertain about where she stood.
Lower Inflation
Over the summer, lower inflation data and softer labor market data “clarified” that economic overheating is no longer the main economic and market risk for investors, according to Lauren Goodwin, an economist and Chief Market Strategist at New York Life Investments.
“Instead, the Fed is now focused on growth: keeping the labor market from deteriorating further,” Goodwin said in a note shared with GOBankingRates. “This major turning point in the Fed’s data point is pivotal for the markets. It means that good economic news — once concerning for its signal of a potential overheating scenario — is now simply a relief, a signal that recession is not yet here.”
That’s not to say that everything is rosy. Weak manufacturing data could spell bad news for the stock market, Goodwin added. However, in terms of some of the other big concerns — specifically inflation — Biden/Harris policies have helped limit the damage while also resetting consumer expectations, according to certain economists.
“Consumers are still mad about inflation, which most people measure by comparing prices today with where we remember them being ‘not that long ago,'” Bill Adams, Chief Economist for Comerica Bank, wrote in an email note. “For most consumers, those anchors are still in the pre-pandemic period. For me, they are in the early 2000s, when gas was under $1 a gallon, a movie ticket was $5, and ‘Stankonia’ had just come out. If inflation continues to trend more normally, consumers will become used to higher price levels, and frustration over inflation will fade.”
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Tax Breaks
Meanwhile, Harris has gained support among certain business and economic experts because of her focus on helping average Americans. One of those experts is Ben Johnston, COO of Kapitus, a New York-based provider of small business financing solutions.
“The Harris campaign’s recent economic proposals have centered around tax breaks for new parents and first-time home buyers, as well as the elimination of some forms of personal medical debt, the capping of drug costs, and a yet-to-be-defined ban on price gouging for groceries and food,” Johnston told GOBankingRates. “These proposals are meant to appeal to lower and middle-class Americans who have suffered economically as inflation has reduced their ability to buy a home, cover healthcare costs, start a family, and put food on the table. These measures may reduce the financial burden on some Americans.”
Johnston also sounds upbeat about Harris’ plan to boost startups with “generous tax deductions” of up to $50,000 and a stated goal of having 25 million new businesses form in her first term if she gets elected.
“The IRS already allows small business owners to deduct $5,000 in startup costs from their personal taxes,” Johnston said. “This proposal simply increases the allowable deduction by ten times.”
He called the goal “achievable” and cited data from the U.S. Census Bureau showing that there were 5.5 million new business applications submitted in the U.S. last year.
“New business starts would only need to grow by 5% annually over the next four years in order to reach the 25 million new business goal,” Johnston noted. “Many of these new small businesses will be created by entrepreneurs with other sources of income who are starting a side gig that they hope will grow into a sustainable long-term business. For these entrepreneurs, an additional $45,000 tax break could be the difference between making ends meet or throwing in the towel.”
Harris also backs expanding the child tax credit to $6,000 for families with newborn children.
“These tax credits dramatically reduced childhood poverty during the COVID pandemic. Low-income communities will also benefit from these measures,” said Frank Altman, author of “A New Capitalism: Creating a Just Economy That Works For All” and the founder of Community Reinvestment Fund, USA Altman.
In a previous conversation with GBR, Altman also gave Harris high marks for a series of economic proposals designed to reduce costs for common expenses.
“These policies are focused on improving the lives of working people and creating a path to the middle class for Americans who have been locked out of economic opportunity,” Altman said. “Her proposals start with a middle-class tax cut that will put more money in the hands of strapped families.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m an Economist: Here Are the Financial Reasons to Vote for Harris
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