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The 2024 U.S. Election Series: “It’s the Economy, Stupid”

Alexi Guagas
Senior Associate Adviser
30 Oct 2024

“It’s the economy, stupid,” a slogan made famous by legendary Democratic political strategist, James Carville during Bill Clinton’s 1992 presidential election campaign, has made a resounding comeback.

With days remaining until election day, it’s clear that the economy stands as the most pressing issue for voters, overshadowing topics like healthcare, immigration and women’s rights.

Voter Sentiment
A remarkable 81% of registered voters cite the economy as the primary factor influencing their vote this year. Despite positive signs, many Americans—especially those in middle and lower-income brackets—feel the weight of cost-of-living pressures. Recent surveys reveal that 75% of voters are concerned about their personal finances, with many families living paycheck to paycheck. As these economic pressures intensify, dissatisfaction with the incumbent Democratic administration has translated into increased support for Donald Trump.

Perception vs. Reality
At the core of the economic debate is a significant disconnect between actual economic statistics and public opinion. While metrics like unemployment rates, GDP growth, and wage increases indicate improvement, anxiety about lingering inflation and job stability persists amongst the general public. Many voters’ personal experiences have overshadowed positive trends, leading to widespread pessimism about their financial futures. Inflation, particularly affecting essentials like housing, groceries, and fuel, have become key concerns for voters in 2024.

A Goldilocks Economy
Despite these challenges, several signs suggest the U.S. economy may be stronger than many realise:

  • GDP Growth: As of June 2024, the U.S. GDP grew at an annualised rate of 3%, showing resilience against inflation.
  • Unemployment Rate: By September 2024, the unemployment rate has fallen to 4.1%, well below the long-term average of 5.7%.
  • Wage Increases: Average hourly earnings have risen by 4% over the past year, improving consumer purchasing power.
  • Consumer Spending: Positive trends in consumer spending indicate households are still willing to spend, despite economic worries.
  • Market Confidence: The S&P 500 has surged over 23% this year, reflecting investor optimism.
  • Interest Rate Cuts: The Federal Reserve’s recent interest rate cuts signal a proactive approach to normalising inflation and supporting economic growth.

Messaging
Kamala Harris has struggled to connect these positive macroeconomic indicators to the lived experiences of voters. Being associated with an unpopular Biden administration has further complicated her messaging. If individuals feel financially strained, they are likely to distrust positive economic reports, continuing a broader perception of economic failure. Conversely, Trump has provided zero detail ‘concepts of a plan’ on what he would do to assist those America’s who are struggling financially – other than his self-indulgent quest to seek revenge on those who he despises.

My advice for the candidates closing arguments – If Harris wants to gain voter trust, she’ll need to translate those positive numbers into tangible relief for everyday Americans. As for Trump, perhaps it’s time to shift gears from revenge politics to a real economic playbook—because just saying “Make America Great Again” isn’t going to pay the bills.

The Final Countdown
With less than a week until election day, the race remains too close to call. Early voting numbers are significantly higher than in previous cycles, potentially leading to a record turnout, which has historically favoured Democrats. As of today, 55% of early voting in the key battleground swing states is favouring women over men, another good sign for Harris (who has courted the female vote).

However, with the opinion polls tightening and, in some cases, favouring Trump, betting markets and platforms like Polymarket currently show Trump as the clear favourite – with a 66% probability of winning. FiveThirtyEight’s simulations further depict a tightly contested race, with Harris and Trump nearly neck and neck in numerous projections.

Like two staying thoroughbreds exchanging leads down the long Flemington straight during a Melbourne Cup – Harris and Trump are inseparable. If I had to predict, I would say that while Harris may win the popular vote, Trump has the slight edge in the Electoral College and critical swing states.

As attention is fixated on the presidential race, the House and Senate races also hang in the balance. We may witness an historic moment where the House and Senate flip, for the first time ever. The House could flip from Republican to Democratic control, while the Senate may flip from Democratic to Republican control.

No matter the outcome, one thing’s for sure: this election, with all its ‘unprecedented’ moments (and there have been many) promises to be the closest result since 2000.

One for the history books!