A customer walks by a display of fresh eggs at a grocery store on Sept. 25 in San Anselmo, California. Grocery prices rose 0.4% in November, according to the Consumer Price Index, leading to tougher times for many during the holiday season. (Photo by Justin Sullivan/Getty Images)

A rise in food prices makes for a less than merry holiday season.

Grocery prices rose 0.4% in November, according to the Consumer Price Index, released this week by the U.S. Bureau of Labor Statistics.

Eggs made one of the biggest jumps at 8.2% over the month, and 37.5% over the past year, providing challenges for people trying to eat a somewhat cheaper protein and families cooking holiday foods such as sugar cookies and jelly doughnuts.

Although the increase in food prices has moderated a bit from past years, they are still more than 20% higher than they were before the pandemic, according to David Ortega, at Michigan State University.

“It was a key issue in the election in terms of people really feeling that sticker shock at the grocery store,” said Ortega, a food economist.

President-elect Donald Trump vowed to bring down prices during his campaign and blamed the Biden administration for how they reached this point. But in an interview with TIME published this week, Trump said he does not believe his presidency would be a failure if grocery prices do not come down.

“It’s hard to bring things down once they’re up,” he said.

Price changes to understand before you set the holiday table

The increase in grocery, or food at home prices, was partly driven by the rise in egg and beef prices, Ortega said. He said the price of holiday roast has been affected by drought and high feed prices. This year, the inventory of beef cattle was the smallest beef herd since 1951.

“On eggs, the story continues to be bird flu together with increased consumer demand given the holiday season,” he said following Wednesday’s release of the latest Consumer Price Index. “And for beef the issue is supply — high input costs and decisions that beef producers made a couple of years back when they were facing drought and high feed prices which has reduced beef supply, and this in turn is affecting beef prices.”

The latest food price numbers presented a mixed bag for holiday shoppers looking to bake treats this month. Flour and prepared four mixes fell 1% and bread decreased 1.3%, while sugar and sweets rose 0.2%, and butter ticked up 1.5%.

Oranges, including the popular stocking stuffers tangerines, fell 1.8% in the latest Consumer Price Index report.

The rise in cost of eating your meals at home compared to the rise in cost of eating out is also getting narrower, with the gap in inflation between restaurant menu prices and grocery year-over-year prices being the narrowest it has been since May 2023, according to Supermarket News. Food at home in previous reports rose 0.2% and 0.4% compared to 0.2% and 0.3% for the past two food away from home reports.

Are companies profiting off of uncertain times?

Rakeen Mabud, chief economist at the Groundwork Collective, a left-of-center economic think tank, said that just a few seed producers, meatpackers, and grocers dominate the food industry, which is a key part of the story of what drives grocery prices. This hurts lower-income shoppers the hardest. Oklahoma, Iowa, and Arkansas are some of the states most dominated by a single grocer, such as Walmart or Hy-Vee.

“Across the food and grocery industry, we have a sector that is deeply consolidated,” Mabud said.  … And so when you have big companies controlling such large chunks of the market, we know that they have used things like inflation, things like supply chain shocks to jack up prices far beyond what their input costs to justify.”

Mabud said that when there is this level of market concentration, companies can signal to each other in earnings calls that they are going to start raising prices.

“If you know that your only other competitors are also raising prices, there’s kind of no reason for you to try to undercut them if you both hold giant shares of a market,” she said.

An economic paper published this year found that companies are able to coordinate price increases around cost shocks and increase profits from these events. Mabud said the holidays provide plenty of opportunity for the food industry to raise prices on things people ordinarily don’t buy and don’t have a price comparison for during a less in-demand season.

“Grocers and the food industry kind of know that they know that they have more information about the underlying cost of a good than a consumer who only comes to buy the Christmas ham once a year. And so they can take advantage of that,” she said.

An unhappy new year for grocery shoppers

Economists are watching out for how the next administration will impact food prices.

Trump’s promise to impose heavy tariffs on the U.S.’s biggest trading partners – Mexico, Canada and China – are expected to drive up the cost of everything, including groceries.

Products the U.S. can’t produce year round, like fruit and coffee, will be affected, Ortega said.

“There’s still a lot of uncertainty in terms of whether these tariffs are really going to be implemented or are they a negotiating tool? But that creates a lot of uncertainty,” he said. “Even that amount of uncertainty can lead to a rise in costs as companies prepare for the potential of these tariffs taking place.”

Trump’s expected policy of mass deportation of immigrants will also affect the agriculture industry, in addition to the major human rights implications.

“If there’s a mass deportation that is a shock to the labor supply and the agricultural sector. And that will lead to an increase in costs as producers and companies have to offer higher wages to attract enough labor. Ultimately that gets passed down to the consumer in the form of higher prices,” Ortega said.

Mabud is also concerned that expected tariffs could mean companies take advantage of the policy change well beyond the actual financial impact to their business.

“It’s a policy change where consumers don’t necessarily know how much the price of an avocado is going up because of a tariff versus a supply chain issue versus the grocery store just wanting to increase the price,” she said.

Patricia “Pogo” Overmeyer, 65, who works as a lawyer in Arizona and lives with her retired husband, said she has always been focused on how to save money on groceries. But she said she has become even more thrifty since inflation worsened.

She said she’s been using more meatless meals and stocks up on holiday food all year round when prices are low, some of which she freezes and cans.

“Once I retire, our income will not be as high,” she said, “Most likely I will forgo some foods or make substitutions. It’s anyone’s guess as to what we will be paying for groceries.”

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A scene on tariffs from Ferris Bueller’s Day Off in 1986 is getting some extra attention. (Paramount Pictures.)

Fans of the movie, “Ferris Bueller’s Day Off,” will remember the scene. Ben Stein plays a famously boring high school teacher giving a lecture about economics to a room full of teenagers fighting to stay awake. In about a minute, he covers the Smoot-Hawley Tariff Act and the Laffer Curve, fundamental economic topics, desperately trying to get the students to engage with him.

“Anyone? Anyone…” is the memorable device Stein uses, to no avail, to engage an audience who couldn’t care less.

Some analysts say the economy is the reason voters chose Donald Trump for a second term in last month’s election. His economic plan is rooted in the broad and cavalier use of tariffs on imports from friends and foes alike. Last week, he announced his plan to impose 25% tariffs on Canada and Mexico. The announcement prompted a surprise visit from Canadian Prime Minister Justin Trudeau, and a phone call from Mexican President Claudia Sheinbaum.

Meanwhile, the American public, particularly Trump voters, remain in an economic daze much like Ben Stein’s class.

The Smoot-Hawley Tariff Act was passed in 1930 in an attempt to thwart the impacts of the Great Depression. It was legislation initially designed to provide relief to the American agriculture sector but became “a means to raise tariffs in all sectors of the economy.” It also marked the end of an entrenched Republican platform of protectionist policymaking during that era. The policies ended because they were…anyone…anyone? Failures.

The details

Ignorance has become a vital asset in the political space these days. Yes, it is an asset in politics, but it is the devil in economics.

As a political asset, there are voters who believe that simply throwing a tariff at any nation they are mad at has nothing but benefits. Mad at Mexico because of migration? Slap them with a tariff and border crossings will go down, right? A good number of voters believe the answer is yes. Though this is almost entirely wrong, politically speaking, that ignorance served the pro-tariff candidate in November.

Economically however, the only real certainty that a 25% tariff on Mexico will have, is a 25% price increase in America. There actually is no disagreement on how tariffs functionally work, but I will refer to PBS for a simple explanation. Importers here pay the tariff, otherwise known as a tax, and remit that payment to the U.S. Treasury. How they pass that increase in costs along may vary a little from merchant to merchant, but ultimately it ends up in the price the American consumer pays.

Yes, a tariff program, in the most basic sense, is government imposed price increases. So, if high prices are the reason why an American voted against the current party in power, voting for higher prices seems, well, ignorant.

Now, does a tariff hurt who the angry American is mad at? Sure. In our example, Mexican goods become less affordable if a tariff is applied to them. In that sense, a tariff can hurt who it is designed to hurt. But that doesn’t change the fact that Americans pay the tariff, not the other country.

Many voters have the perspective that Trump imposed tariffs during his first term, and everything worked out fine. The Associated Press reports, “When Trump first became president in 2017, the federal government collected $34.6 billion in customs, duties and fees. That sum more than doubled under Trump to $70.8 billion in 2019, according to Office of Management and Budget records.” That sounds like a lot of money, until it is put in the context of the current $29.3 trillion gross domestic product.

The tariffs Trump is discussing in 2024 are wildly bigger and are being threatened toward virtually every country. But that’s not the only thing different between 2024 and 2017.

What else is different?

Anyone? Anyone?

The economy that Trump inherited in 2017 is sharply different than the one he will inherit in January. Inflation eight years ago was low and had been for a long time. Interest rates were also low and had been for a long time. The 2016 election wasn’t about inflation, and those rather small tariffs weren’t either. But times have changed.

For the life of me, I cannot find any credible theory as to how raising prices on imported goods will have the effect of lowering prices. I’ve written that sentence six times, and I know it reads like gibberish, but I just can’t help it.

Simply put, tariffs raise prices. After a bout with historic global inflation, consumers are exhausted with high prices. We can all agree with that part.

But there is a word for thinking that raising prices will actually lower them.

Anyone? Anyone?

Ohio Capital Journal is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Ohio Capital Journal maintains editorial independence. Contact Editor David Dewitt for questions: info@ohiocapitaljournal.com. Follow Ohio Capital Journal on Facebook and X.

President-elect Donald Trump says on his first day in office he would impose 25% tariffs on all imports from Canada and Mexico and 10% tariffs on goods from China until those countries stop the flow of illegal drugs and migrants into the U.S. (Getty photo illustration by Olivier Le Moal)

President-elect Donald Trump’s announcement Monday that he would impose harsh tariffs on the United States’ closest trading partners will work against his pledge to bring down consumer prices, Democrats in Congress and economists are warning.

In a pair of posts to his social media platform, Truth Social, on Monday evening, Trump said on his first day in office he would impose 25% tariffs on all imports from Canada and Mexico and 10% tariffs on goods from China until those countries stopped the flow of illegal drugs and migrants into the U.S.

“Thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before,” Trump wrote. “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!”

While Trump has not always followed through on threats of stiff tariffs — generating doubts about how severe the next round will actually be — the executive branch does have wide latitude to impose the taxes on foreign goods without congressional approval, meaning it is likely Trump will act in some way.

“We are going to get several tariff threats via rage-posts over the next four years,” Brendan Duke, a senior director for economic policy at the liberal Center for American Progress, said in an interview. “Unclear what exact levels on what exact countries he is going to pursue.”

What about inflation?

Tariffs are consistent with Trump’s preference for a protectionist trade policy, but may actively hurt in an area that was key to his election win over Democratic Vice President Kamala Harris this month: taming inflation.

An analysis from the Center for American Progress said the tariffs Trump announced Monday would raise annual costs for the average U.S. family by $1,300.

Democratic members of the U.S. House Ways and Means Committee, which oversees tax and trade policy, estimated tariffs favored by Trump would increase consumer costs by up to $4,000 per year.

According to CBS News exit polling, 78% of voters said inflation was a moderate or severe hardship. Trump won voters who rated the economy as bad by 40 points over Harris.

Cars, ag and energy to be hardest-hit

About 15% of goods consumed in the United States are imported, Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, an economics research center, said.

Adding across-the-board tariffs on those imports would contribute to consumers’ overall cost of living, even without considering related economic consequences.

“You’ve added to inflation, and that’s assuming that U.S. producers of similar products don’t jack up their prices,” he said. “But experience shows that if the economy is strong, they’ll do just that.”

The U.S. automotive sector, which is heavily integrated with Mexico and Canada with parts of a single vehicle produced in all three countries, could see “pretty startling” price increases, Hufbauer said.

Additionally, the U.S. imports Mexican fruits and vegetables and Canadian oil, complicating Trump’s campaign promise to bring down prices specifically of groceries and gas, Duke said.

“Americans have obviously been frustrated with the cost of food and the cost of gas,” he said. “Some parts of the United States are heavily reliant on Canadian oil, even though we’re a net exporter … So, one would expect price increases, especially in places like the Midwest that are heavily dependent on Canadian oil.”

Tariffs on Chinese goods would increase the costs of electronics, clothing and other consumer goods, Duke said.

Democratic legislation

Ways and Means Democrats, led by Washington’s Suzan DelBene and Virginia’s Don Beyer, and also joined by Earl Blumenauer of Oregon, Terri Sewell of Alabama, Steven Horsford of Nevada, Dan Kildee of Michigan and four others, introduced a bill Tuesday to rein in the executive’s ability to implement tariffs, citing the added cost to American families.

“The American people have clearly and consistently said that costs are one of their top concerns,” DelBene said in a statement. “Imposing sweeping tariffs on imported goods would raise prices on consumer products by thousands of dollars a year according to estimates. Not only would widespread tariffs drive up costs at home and likely send our economy into recession, but they would damage our trade relationships with allies and likely lead to significant retaliation, hurting American workers, farmers, and businesses.”

Trump’s promises of dramatic tariffs go beyond the intent of the law that gave the president the power to enact tariffs, the Democrats said. Congress wanted a president to be able to quickly impose tariffs on hostile foreign countries, but did not intend “to allow a president to indiscriminately impose tariffs without Congress’ approval.”

Tariffs can be an important tool for conducting foreign policy, but the range Trump is proposing is 10 to 20 times beyond what even he did in his first term, Duke said.

He cautioned that the final form of new tariffs may not be exactly what Trump proposed Monday night, though they could be similar.

“He’s gonna do something on tariffs. I don’t know what. It’s probably not these exact levels on these exact countries,” he said. “But it rhymes with it.”

The U.S. Capitol in Washington, D.C. (Jennifer Shutt | States Newsroom)

In Wisconsin’s 1st Congressional District, a Democratic political veteran is trying to accomplish what a string of newcomers have failed at for three decades: to unseat the Republican incumbent.

Republican U.S. Rep. Bryan Steil, a former corporate lawyer from Janesville, has held the seat in the U.S. House of Representatives for three terms, following in the footsteps of his one-time boss, former Republican House Speaker Paul Ryan.

Steil’s challenger, Peter Barca, a former Democratic Assembly leader from Kenosha, is seeking to return to the House in the seat he held for one term. With two stints in the Wisconsin Assembly under his belt — first in the 1980s and early ‘90s, then again from 2008 to 2019 — Barca also served as secretary for the Wisconsin Department of Revenue from 2019 until earlier this year.

In the Assembly, Barca led the Democratic caucus, but he’s also billed himself as a pragmatist open to bipartisan cooperation, both as a lawmaker and as Democratic Gov. Tony Evers’ revenue secretary.

“In my career, I’ve always worked across the aisle, even when I didn’t need to,” Barca said in an interview. “Even when I left the governor’s cabinet, there was an article in the Milwaukee Journal Sentinel that quoted prominent Republicans saying, ‘Barca gets it. He knows how to work across the aisle.’”

Barca said that in conversations, voters across the district have told him “they’re very disappointed with their government. They feel like [lawmakers are] not accomplishing anything.”

The Wisconsin Examiner reached out to Steil’s campaign seeking an interview with the GOP incumbent and was referred to the communications director. Three requests via email received no response.

In a newspaper column published in the Milwaukee Journal Sentinel, Steil emphasized higher prices for groceries, gas and housing. He also called for cuts in federal spending, in federal regulation and in “wasteful government programs.”

In addition, Steil in his column called the U.S. southern border “unsecure” and that an increased flow of migrants has “allowed dangerous individuals to enter our country illegally.”

“Right now, our country is headed in the wrong direction,” the three-term congressman wrote. “I’m committed to getting us back on track.”

Republicans have had a lock on the 1st District for 30 years — ever since Barca,  after serving in the House for one term, narrowly lost to a Republican in 1994. In 1998, Republican Paul Ryan of Janesville won the seat and easily held it after the district lines were redrawn twice in the GOP’s favor following the census in 2000 and 2010.

Ryan, who rose to become U.S. House Speaker, chose not to run again after 20 years. Steil, a corporate attorney who had worked for Ryan from 2003 to 2004 before law school, won the 2018 Republican nomination to succeed his former employer and was elected to the seat that November. He has been reelected twice since then.

The 1st District, meanwhile, was redrawn again before the 2022 election to include the industrial city of Beloit, making it more competitive, according to political analysts. Nevertheless, Steil won by 11 points after spending $2.4 million while Democratic challenger Ann Roe raised and spent about one-third of that amount.

At the start of 2024, two political newcomers were in the running for the Democratic nomination to challenge Steil. Then the Democratic Congressional Campaign Committee put the 1st District on its target list and recruited Barca to run. After Barca entered the race in April with an immediate list of high-profile endorsements, the other hopefuls dropped out.

Even with more money to spend than the previous Democratic candidate, Barca heads into Election Day out-funded. As of Oct. 16, according to Federal Election Commission records, Steil has raised $5.3 million and spent $4.5 million. In the same period, Barca raised just under $2 million, spending $1.85 million.

High prices and the economy

Both campaigns center economic issues, but from contrasting vantage points.

In the first two years of the Biden administration Democrats enacted four major pieces of legislation. Two passed with only Democratic votes: the American Rescue Plan Act (ARPA), enacted in Biden’s first 100 days, and the 2022 Inflation Reduction Act. The other two, the 2021 bipartisan infrastructure law and the 2022 CHIPS and Science Act, passed with some Republican support.

Steil voted against all four measures. In his Journal Sentinel column he didn’t name any of the bills but alluded generally to them, blaming the Biden administration for the inflation spike that started in 2021 and continued into 2022.

“Costs are too high,” Steil wrote. “When I’m out talking to workers, families, and seniors across Wisconsin they are struggling with higher costs due to inflation. Whether it’s prices at the grocery store, the gas station, or the cost of housing.”

Accusing the Biden administration of “reckless spending and a regulatory agenda that dramatically increased costs,” Steil asserted, “By cutting red tape, restoring energy independence, and ending wasteful government programs, we can make prices affordable for everyone.”

Mainstream economists have disputed the argument that places all the blame for the inflation spike on federal spending.

Menzie Chinn, an economist at the University of Wisconsin-Madison, said in an interview that COVID-19 pandemic relief checks — issued in the last year of the Trump administration as well as after the passage of ARPA under Biden — could be responsible for about a third of the 2021 price spike.

Chinn said worldwide supply chain clogs are as much to blame for driving up prices as the federal spending infusion, however.

In late 2021 and early 2022, he said, ships were backed up at ports, businesses such as restaurants were “having a hard time getting people to come back” because of fears of catching COVID-19, and oil prices were pushed up as a result of Russia’s war in Ukraine.

“Inflation jumped way up to 9% by mid-2022,” Chinn said. “But then you look at it after that, it came down very quickly without lots of unemployment and without lots of cuts in government spending, even before the Fed started raising interest rates.”

Inflation is now back down below 3%. And while the pandemic relief funds may have contributed to the short-term inflation spike, the money they brought to households “were necessary to support the economy,” Chinn said. “And the fact that they were more generous is probably the reason that we’re [now] growing faster than Western Europe on the average.”

Attacking ‘no’ votes

Barca and Democrats are highlighting Steil’s votes against the four bills.

The infrastructure law and the Inflation Reduction Act both included provisions aimed at boosting clean energy to help curb climate change.

At a September news conference in Racine, Mayor Cory Mason praised both bills for funding investments that enabled the city to increase its clean energy and address climate change at the local level. A reporter asked Mason, who has endorsed Barca, about Steil’s votes against the legislation.

“Having federal partners that believe investing in communities like Racine is really critically important,” said Mason. “I think it’s unfortunate that he didn’t take the opportunity to make those investments.”

Barca said that while campaigning, he has heard “a lot about middle class [people not] being able to afford things.” He criticized Steil’s vote against the Inflation Reduction Act in that light, particularly because of provisions in the law that lower Medicare drug costs.

The Inflation Reduction Act instituted a $35-a-month cap on the cost of insulin for Medicare patients. It also capped their out-of-pocket drug costs at $2,000 a year starting in 2025. And for the first time it empowered Medicare to negotiate with pharmaceutical companies on the prices of prescription drugs.

Pointing out Steil’s vote against the bill, Barca said, “If I’m in the Congress, I’ll help work to negotiate prescription drug costs for everybody, not just for Medicare.”

In his Journal Sentinel column Steil didn’t address the law directly, but wrote that he favors “more price transparency” by drug companies, including proposed legislation that would require TV drug ads to list the prices of the drugs they’re advertising.

Steil also mentioned his support of a bill nicknamed the SPIKE Act that would require drug companies “to publicly disclose why they jacked up prices.”

That legislation was introduced by Democrats in 2019 and again in 2021, but did not pass, and has not advanced in the current Congressional term.

Federal taxes

Steil was elected after the passage of a signature piece of legislation during Donald Trump’s presidential term: the 2017 tax cut.

The bill permanently cut the corporate income tax rate to 21% from 35%. It also included temporary measures — marginal tax rate cuts across the board, doubling the federal child tax credit and nearly doubling the standard deduction — which will expire Dec. 31, 2025.

Whether to extend or rewrite the 2017 law is expected to be a top issue for Congress in the coming year.

According to the Center on Budget and Policy Priorities, the legislation’s corporate tax rate cut only benefited the highest-paid 10% of employees. The nonprofit center also found that the overall law “was skewed to the rich,” giving the top 1% of households by income an average tax cut of more than $60,000 in 2025 and the bottom 60% of households an average tax cut of less than $500.

Steil has said he would support an extension and has cosponsored U.S. House legislation to make its cuts permanent.

“He’s voted to go along with the old system of giving all the tax breaks to the top 1%,” Barca said. “I would work to give middle-class tax relief.”

As an example, he cited a provision included in the ARPA pandemic relief bill that temporarily expanded the federal child tax credit. Attempts to revive the expanded credit after it expired at the end of 2021 foundered.

Barca has also cited his experience in the Small Business Administration, where he was a regional administrator in the 1990s after leaving Congress, as an additional qualification, along with his success in passing economic development legislation in Wisconsin. “Small businesses need help. They need technical help. They need access to capital,” he said. “Those are things I know a lot about.”

Reproductive rights and immigration

As in many state and national races this year, Barca and the Democrats are also leaning into reproductive rights.

When the U.S. Supreme Court in 2022 overturned the 49-year-old Roe v. Wade decision that established a federal right to abortion, Steil praised the ruling on social media, declaring himself “proudly pro-life” on Twitter (now renamed X).

Steil was among a group of Republican members of Congress who signed an amicus brief urging the Court to overturn Roe.

“Today’s decision will bring this important issue back to the states. This is a great victory for life,” Steil tweeted.

Steil has said he favors permitting abortion in cases of rape, incest or to save the life of the mother, according to Wisconsin Public Radio.

Interviewed on WISN-TV, Steil dismissed the prospect of a national abortion ban. “Speaker [Michael] Johnson has made clear that a national abortion ban is not going to move forward in the House,” he told the television station. “And I would not support such a move in the House, either.”

Nevertheless, Democrats and reproductive rights advocacy groups have charged that, if Republicans win the White House and both houses of Congress, a national abortion ban would be on the agenda. They’ve also pointed to anti-abortion advocates who oppose making exceptions for rape or incest.

Barca has also cited Steil’s endorsement of House legislation declaring that a fetus is a “person” under the U.S. Constitution. Advocates for in-vitro fertilization (IVF) have said the law, if enacted, would threaten the technology that many couples have used to enable them to conceive children.

Steil has said he does not oppose IVF. Barca, however, said that the congressman has not signed on to legislation that would explicitly guarantee the legality of the procedure.

Steil’s campaign, and his priorities in the House in the last year, have also highlighted immigration. He has spearheaded legislation banning noncitizens from voting in all elections — they’re already excluded from voting in federal elections — and joined other Republican candidates in decrying the surge in migrants at the Southern border.

In November 2023, Steil and Republican Sen. Ron Johnson held a news conference in Whitewater to call attention to an influx of migrants that had led to strained resources in the community and blame the Biden administration’s management of the border.

Local officials and residents, however, said that event as well as publicity in right-wing media falsely connected the community’s immigrant population, which had been growing for years, to the short-term surge at the border. The city’s police chief also debunked claims of an immigrant-driven crime wave.

Barca has criticized Steil for joining other Republicans in Congress who disavowed a border security bill that the White House negotiated with a group of conservative GOP senators.

Congressional Republicans abandoned the deal at the urging of former President Donald Trump, who has built most of his campaign to return to office around attacking immigration.

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Sale prices are displayed for items at a grocery store in San Rafael, California, on Sept. 10, 2024. Grocery prices are just one piece of the U.S. economy, which is key to many voters in their pick for president. (Photo by Justin Sullivan/Getty Images)

The economy is key to many voters in their pick for president, but that fervor also makes  it an attractive subject for distortions, misinformation, and oversimplification.

Nearly eight  in 10 U.S. voters say that the economy is one of the most important issues to them in this upcoming presidential election, according to an AP-NORC poll conducted in September. Although 66% of voters say the economy is very or somewhat poor, six in 10 also say their personal finances are good.

Millions have already cast their ballots through early or mail voting. But those who are still deciding between the two main candidates – Democrat Kamala Harris and Republican Donald Trump – have until Nov. 5 to wade through various myths and exaggerations to understand the state of the economy and each candidate’s record on related issues.

What is the state of inflation in the U.S.? 

The most recent cycle of inflation reached its peak in June 2022 at 9.1%. Inflation has fallen considerably since then and to a more manageable 2.4% in September’s Consumer Price Index, a measure of inflation. Wage growth, meanwhile, has beaten inflation for more than a year. The Federal Reserve cut its key interest  rate by half of a percentage point for the first time in four years in September after inflation neared  toward its goal of 2%.

But those macro figures don’t hit home with everyone, because of the prices of groceries and other essentials.

The literal prices that people see on goods make them think that they’re not doing as well because they feel that they are higher than they think they should be,” said Elise Gould, senior economist at the left-leaning Economic Policy Institute But, those prices are actually lower as a share of their wages than they were four years ago.”

This doesn’t mean that many voters’ experiences of struggling to afford basic items aren’t real. The cost of housing is very high and puts a strain on people’s budgets. The Fed’s interest rate policy affected credit card rates, and thus, people’s ability to make purchases.

Gould said that despite the positive news of slowing inflation, the lack of long-term wage growth before this recent increase has been hard on many Americans.

“Even though things are good, we know that for the vast majority of people over the last several decades, they’ve been faced with relatively slow wage growth and so it can be hard to feel like you’re going to get ahead,” she said.

Was unemployment higher under Biden or Trump? 

The unemployment rate under Donald Trump was fairly low, at 4.7%, when he took office in 2017 , and it mostly trended lower until the beginning of the pandemic. It then shot up to 14.8% in April 2020 and fell sharply for the rest of Trump’s term, which ended in January 2021. The unemployment rate was 6.7% during Trump’s last full month in office.

The labor market has been fairly hot under President Joe Biden. The unemployment rate was 6.4% during the month he and Harris were sworn into office. But since then, it largely fell, and from February 2022 to April 2024, the unemployment rate was below 4%. In September, the unemployment rate was 4.1% but the economy continues to show strong job growth.

Looking at the Biden-Harris administration’s record and Trump’s record outside of the immediate economic impact of the recession and supply shocks during their presidencies, unemployment remained fairly low. Overall, unemployment averaged 3.8% since 2022 and averaged 4% between 2017 and 2019, before the pandemic hit the economy in 2020.

Labor force participation rates and the employment-to-population ratio, measures of the number of people in the labor force and workers employed versus the working age population, were high in the last jobs report and show signs of a healthy labor market.

Skanda Amarnath, executive director of Employ America, a left-leaning group focusing on economic policies, said that it’s also important to understand the percentage of the population adjusting for age, the prime age employment rate. It is marginally higher now, by about 0.3%, than it was right before Covid struck, during the Trump administration, he said.

“We’ve seen generally slower paces of employment gains more recently and that might be just because a lot of people are now back in the labor force itself. It’s probably a little harder to grow employment quickly when you’re coming from a high level as opposed to a low level,” Amarnath said. “Nevertheless, we’re at an employment rate where there’s been a reasonably strong labor demand, a little bit combined with the fact that people are also moving out into their retirement years.”

The American Rescue Plan Act, CHIPS and Science Act, Inflation Reduction Act, and bipartisan infrastructure deal, enacted during Biden’s presidency, helped fuel the recovery, Amarnath said. The CARES Act, which was signed into law byTrump, likely helped the U.S. avoid a protracted recession, he added.

What would Trump’s proposed  tariffs do to the U.S. economy

In an interview with John Micklethwait, editor-in-chief of Bloomberg News at the Economic Club of Chicago on Oct. 15, former president Trump said tariffs would be good for economic growth.

“We’re going to bring companies back to our country … We’re going to protect those companies with strong tariffs because I’m a believer in tariffs,” he said.

The Trump campaign has also proposed a 60% tariff on goods from China, one of the U.S.’s largest trading partners, and 10-to-20% on other imports. The Tax Foundation, a business-friendly research think tank, estimated that if Trump’s proposed tariffs were to be implemented, it would reduce GDP by at least 0.8% and eliminate 684,000 jobs.

Tariffs would likely result in lower trade and retaliatory tariffs from other countries, raising prices, and costing each household between $1,900 to $7,600 in 2023 in dollars, according to the Budget Lab at Yale, a nonpartisan policy research center.

“If the tariff wars back in President Trump’s first term are any indication, they’re going to respond with their own tariffs and other trade actions,” said Mark Zandi, chief economist at Moody’s Analytics. “Broadly, tariffs are going to raise prices for imported goods, weaken consumer purchasing power and slow growth.”

Zandi added that although the retail sector would be particularly hard hit by these tariffs, he doesn’t think any industry would come away unscathed by the policy.

How do Harris and Trump’s economic plans compare? 

Harris has said her plans, which include building more affordable housing supply, restoring and expanding the child tax credit, and supporting legislation to expand labor rights, have been approved by respected economists and sources of financial research.

“Please do check out the Wall Street Journal or Goldman Sachs or the 16 Nobel laureates or Moody’s, who have all analyzed the plans and said mine will strengthen the economy, his will make it weaker,” Harris said.

The reality is a little more complicated. Some of the reports Harris referred to do not say the economy would weaken under Trump but would grow less than the economy under Harris in certain scenarios, depending on the political breakdown in Congress.

Others show the GDP falling more as a result of Harris’ proposals. The Penn Wharton Budget Model looking at Trump and Harris proposals shows the GDP falling 0.4% under Trump by 2034 and declining 1.3% under Harris over the same period, but notably, it does not factor in proposals not to tax tips, mentioned by both candidates, or Trump’s tariff policies.

Before Biden withdrew his candidacy, 16 Nobel-prize winning economists said Biden’s investments in the economy through signing legislation to improve infrastructure and manufacturing would boost economic growth. They spoke out against Trump’s tariff plans. Although Harris is part of the Biden administration, they did not address her specific plans as a candidate. On Wednesday, 23 Nobel-prize winning economists, including the economist who led the last letter, Joseph Stiglitz, endorsed Harris’ specific policies.

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The Republican presidential nominee, former U.S. President Donald Trump, on Tuesday, Oct. 15, spoke to the Economic Club of Chicago. In this photo, he speaks to attendees during a campaign rally at the Mosack Group warehouse on Sept. 25 in Mint Hill, North Carolina. (Photo by Brandon Bell/Getty Images)

Republican presidential nominee Donald Trump defended his plans for steep tariffs on Tuesday, arguing economists who say that those higher costs would get passed onto consumers are incorrect and that his proposals would benefit American manufacturing.

During an argumentative hour-long interview with Bloomberg Editor-in-Chief John Micklethwait hosted by the Economic Club of Chicago, Trump vehemently denied tariffs on certain imported goods would lead to further spikes in inflation and sour America’s relationship with allies, including those in Europe.

“The higher the tariff, the more likely it is that the company will come into the United States, and build a factory in the United States so it doesn’t have to pay the tariff,” Trump said.

Micklethwait questioned Trump about what would happen to consumer prices during the months or even years it would take companies to build factories in the United States and hire workers.

Trump responded that he could make tariffs “so high, so horrible, so obnoxious that they’ll come right away.” Earlier during the interview, Trump mentioned placing tariffs on foreign-made products as high as 100% or 200%.

Harris-Walz 2024 spokesperson Joseph Costello wrote in a statement released following the interview that “Trump showed exactly why Americans can’t afford a second Trump presidency.”

“An angry, rambling Donald Trump couldn’t focus, had to be repeatedly reminded of the topic at hand, and whenever he did stake out a position, it was so extreme that no Americans would want it,” Costello wrote. “This was yet another reminder that a second Trump term is a risk Americans simply cannot take.”

Smoot-Hawley memories

Micklethwait noted during the interview that 40 million jobs and 27% of gross domestic product within the United States rely on trade, questioning how tariffs on those products would help the economy.

He also asked Trump if his plans for tariffs could lead the country down a similar path to the one that followed the Smoot-Hawley tariff law becoming law in June 1930. Signed by President Herbert Hoover, some historians and economists have linked the law to the beginning of the Great Depression.

Trump disagreed with Micklethwait, though he didn’t detail why his proposals to increase tariffs on goods from adversarial nations as well as U.S. allies wouldn’t begin a trade war.

The U.S. Senate’s official explainer on the Smoot-Hawley tariffs describes the law as being “among the most catastrophic acts in congressional history.” And the Congressional Research Services notes in a report on U.S. tariff policy that it was the last time lawmakers set tariff rates.

Desmond Lachman, senior fellow at the American Enterprise Institute, a conservative-leaning think tank, wrote last month that Trump’s proposal to implement tariffs of at least 60% on goods imported from China as well as 10 to 20% on all other imports could have severe economic consequences.

“It is difficult to see how such a unilateral trade policy in flagrant violation of World Trade Organization rules would not lead to retaliation by our trade partners with import tariff increases of their own,” Lachman wrote. “As in the 1930s, that could lead us down the destructive path of beggar-my-neighbor trade policies that could cause major disruption to the international trade system. Such an occurrence would be particularly harmful to our export industries and would heighten the chances of both a US and worldwide economic recession.”

CRS notes in its reports that while the Constitution grants Congress the authority to establish tariffs, lawmakers have given the president some authority over it as well.

The United States’ membership in the World Trade Organization and various other trade agreements also have “tariff-related commitments,” according to CRS.

“For more than 80 years, Congress has delegated extensive tariff-setting authority to the President,” the CRS report states. “This delegation insulated Congress from domestic pressures and led to an overall decline in global tariff rates. However, it has meant that the U.S. pursuit of a low-tariff, rules-based global trading system has been the product of executive discretion. While Congress has set negotiating goals, it has relied on Presidential leadership to achieve those goals.”

The presidency and the Fed

Trump said during the interview that he believes the president should have more input into whether the Federal Reserve raises or lowers interest rates, though he didn’t answer a question about keeping Jerome Powell as the chairman through the end of his term.

“I think I have the right to say I think he should go up or down a little bit,” Trump said. “I don’t think I should be allowed to order it. But I think I have the right to put in comments as to whether or not interest rates should go up or down.”

Trump declined to answer a question about whether he’s spoken with Russian leader Vladimir Putin since leaving office.

“I don’t comment on that,” Trump said. “But I will tell you that if I did, it’s a smart thing. If I’m friendly with people, if I have a relationship with people, that’s a good thing, not a bad thing.”

Journalist Bob Woodward wrote in his new book “War” that Trump and Putin have spoken at least seven times and that Trump secretly sent Putin COVID-19 tests during the pandemic, which the Kremlin later confirmed, according to several news reports.

Trump said the presidential race will likely come down to Pennsylvania, Michigan and possibly Arizona.

The Economic Club of Chicago has also invited Democratic presidential nominee Kamala Harris for a sit-down interview.

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The U.S. Bureau of Labor Statistics released a report showing a strong labor market with growing wages, a lower unemployment rate, and the addition of 254,000 jobs to the economy. (Photo by Joe Raedle/Getty Images)

A month before voters cast their ballots, the U.S. Bureau of Labor Statistics released a report showing a strong labor market with growing wages, a lower unemployment rate, and the addition of 254,000 jobs to the economy.

Eighty-one percent of registered voters say the economy is key to their vote for president this fall, according to a September Pew Research report.

“We saw job creation beating expectations, unemployment rate ticking ever so slightly down, and we saw great wage growth which has continued to outpace inflation,” said Kitty Richards, senior strategic advisor at Groundwork Collaborative, a progressive economic policy think tank. “We don’t have the new inflation numbers for last month, but wage growth is strong and has been outpacing inflation for about 16 months now and those are all really good things.”

The unemployment rate in September was 4.1% compared to 4.2% in August and 4.3% in July. A rising unemployment rate earlier in the year had caused some economists to worry that the Federal Reserve’s decision in the past few months not to cut the federal funds rate was beginning to hurt the labor market.  In September, the Fed decided to cut the rate by half a percentage point, allaying those worries.

The Fed began an aggressive campaign to beat inflation by raising rates in March 2022 and stopped in mid-2023 but the rate remains high and has affected the economy, particularly the housing market, economists say. Inflation has significantly cooled since its peak in June 2022.

“If today’s job report had said that the labor market was softening further, I think a lot of us would be more aggressively concerned about the risks posed to the labor market by high interest rates,” Richards said. “It’s great to see that those risks have not tipped over yet … But there are risks and we need to be really mindful of what it would mean if we started to see the unemployment rate picking up again.”

The report also showed continued job growth in healthcare, government, social assistance and construction last month. Wage growth was strong, rising 4% over the past year.  Adult men saw their unemployment rate fall, at 3.7%, last month. Women, Black people, Asian people, white people, Hispanic people, and teens all had little or no change in their unemployment rates in September.

The prime-age employment-to-population ratio, which is a measure of how well the economy provides jobs for people who are interested in working, remains at a 23-year high in today’s jobs report.

“I think the labor market continues to be healthy and strong and it’s great to see labor force participation and employment-to-population rates staying high,” Richards said. “That’s what we want to see in the kind of economy that is going to drive wage gains for working people and continue some of the gains that we’ve seen since the COVID recession.”

But she added that there is still room for those measures to grow.

“We’ve seen that the economy can outperform what a lot of people thought before we had this really prolonged period of low unemployment coming out of the COVID recession. And I hope that we continue to see this kind of growth,” she said.

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Flanked by Marcia Kasieta, left, and U.S. Rep. Mark Pocan, right, FTC chair Lina Khan describes her agency's work in a conversation with reporters Thursday. (Erik Gunn | Wisconsin Examiner)

As consumers continue to face higher prices for groceries and other goods, the Federal Trade Commission is looking at whether some of those price hikes are driven by profiteering.

The agency is “using all of our tools to make sure that no American is paying more because of illegal business practices, be it at the grocery store, be it at the pump, be it at the pharmacy, on food and groceries in particular,” FTC Chair Lina Khan told reporters Thursday during a visit to Wisconsin.

Khan was in the Badger State for stops that included a round table discussion about a recent nursing home sale and a chat with reporters at the Madison office of Democratic Rep. Mark Pocan.

That conversation included a quick rundown of issues at the forefront of the FTC’s agenda. The agency enforces federal antitrust and consumer protection laws, “which are really about making sure that our markets are fair and honest and competitive, so that people can get a fair shake,” Khan said.

State price-gouging laws are intended to address momentary surges in the price of goods that take advantage of circumstances such as natural disasters. But the FTC focuses on “a broader set of corporate practices that we think may be unlawfully hiking up prices,” Khan said. 

Marcia Kasieta, business director of the Badger Prairie Needs Network, a nonprofit serving Dane County, said that the group’s food pantry has been pinched by soaring demand and soaring costs.

“This year my pantry is providing food assistance to 7,000 individuals a month,” Kasieta said — up from 2,200 a month just two years ago.

“Our purchasing budget has more than doubled in the last two years,” she said. “At today’s prices, with demand for food assistance continuing to climb, our budget next year will be eight times more than it was before the pandemic, and three times more than just two years ago.”

Khan said the FTC is looking at inflation in consumer prices from several angles.

One example is price discrimination. “Sometimes we hear from independent grocers they’re not able to get the same terms as the big retailers,” Khan said.

Some small retailers have reported that the prices wholesalers are charging them for an item exceeds the shelf price at a big chain store. “So, there seems to be potentially some discrimination going on there, maybe in unlawful ways,” she said.

The FTC has also opened a market inquiry to look at reports of “surveillance pricing — when companies may be able to charge each person a different price based on what they know about you,” she said.

For example, she suggested the possibility that based on consumer data that retailers collect from shoppers, a family whose child has a peanut allergy could be charged a higher price for a nut-free granola bar.

The FTC has ordered eight companies to submit information about their use of consumers’ personal information in setting prices. 

Business consolidation is another trend leading to higher prices, Khan said — whether by directly limiting competition, or by secretly and illegally colluding so that supposedly competing firms don’t undercut each other’s prices.

“We’ve seen some really serious allegations around this in housing, where some lawsuits have been brought, noting that different landlords have all been using the same algorithm to set their rents and they may effectively be engaging in price fixing,” Khan said.

In the food and agriculture sector, “more and more markets are controlled by fewer and fewer players,” she said. “We hear from a lot of farmers that they’ve seen their incomes go down even as consumers are paying more. That would suggest that it’s the entities in the middle that are taking a bigger and bigger cut.”

While prices spiked in the pandemic as supply chains were disrupted, prices have not come down on some products even as the costs to produce them have fallen again, Khan said. “So there’s a question — is it that the companies have the ability to keep prices inflated because there isn’t enough competition in the market?”

Because of concern it would reduce competition, the FTC is challenging the pending merger of supermarket giants Kroger and Albertson’s in federal court.

Khan said she couldn’t comment on details of the case because it remains in litigation, but Pocan observed Kroger and three other supermarket giants “control 70% of the grocery market in the United States.

It’s the FTC’s aim, Khan said, “to make sure that markets are not becoming further consolidated through mergers and acquisitions in ways that will further deprive people of choices that would result in lower prices.”

Before visiting Pocan’s office, Khan was in Baraboo Thursday morning for a community discussion about the recent sale of a county-owned nursing home to a for-profit company. The session was organized by a community group opposed to the sale.

Khan told reporters that while the transaction was in the purview of the Wisconsin Department of Health Services, which is reviewing the matter, and not the FTC, it raises issues about private equity that are on the FTC’s agenda.

“We are more generally concerned about the growing role of private equity, in particular, in parts of health care [and] nursing homes,” Khan said. “There has been some troubling research showing that mortality rates have actually increased after nursing homes have been bought by private equity.”

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Was half of recent inflation caused by corporate greed? is a post from Wisconsin Watch, a non-profit investigative news site covering Wisconsin since 2009. Please consider making a contribution to support our journalism.

Kristie Hilliard opened her new shop, Kristie Kandies, in downtown Rocky Mount, N.C., after getting tired of her factory job at the local Pfizer plant. She’s seen a steady flow of customers, but says she’s doesn’t think either Vice President Kamala Harris or former President Donald Trump would change her economic fortunes. (Kevin Hardy/Stateline)

Editor’s note: This five-day series explores the priorities of voters in Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin as they consider the upcoming presidential election. With the outcome expected to be close, these “swing states” may decide the future of the country.

ROCKY MOUNT, N.C. — The signs on the empty historic buildings envision an urban utopia of sorts, complete with street cafes, bustling bike lanes and a grocery co-op.

“IMAGINE What Could Be Here,” gushes one sign outside the empty, Neoclassical post office. “IMAGINE! A Vibrant Downtown,” reads another mounted on the glass front of a long-ago closed drug store.

In a place like Rocky Mount, North Carolina, it’s not such a stretch: Just across the street, white-collar workers peck away at laptops and sip lattes at a bright coffee bar lined with dozens of potted tropical plants. A few blocks away, a mammoth events center routinely brings in thousands of visitors from across the country. And alongside a quiet river nearby, a meticulously redeveloped cotton mill would be the envy of any American city, with its modern breweries, restaurants and loft living.

An industrial community long in decline, Rocky Mount is slowly building itself back. But in this city of about 54,000, sharply divided by race and class, many residents struggle to cover the basic costs of groceries, housing and child care.

North Carolina reflects the duality of the American economy: Unemployment is low, jobs are increasing and businesses are opening new factories. But high housing and food costs have squeezed middle-class residents despite the gains of rising wages.

“The economy stinks,” said Tameika Horne, who owns an ice cream and dessert shop in Rocky Mount.

Her ingredient prices have skyrocketed, she said, but she can’t continuously raise prices on ice cream cones or funnel cakes. She said last month was her slowest ever, with only $2,000 in sales.

It’s not just the slow sales at her store: Only a few years ago, she paid $700 a month to rent a three-bedroom apartment. Now, her similarly sized rental home costs her $1,350 a month.

Aside from the ice cream shop, Horne also runs a cleaning business with her family and just started a job delivering packages for FedEx.

“It’s just hard right now,” she said.

The economy, a top issue for voters during any election, is particularly important this presidential cycle: Prices of necessities such as groceries aren’t rising as fast as they were, but years of post-pandemic inflation have soured voter attitudes.

And across the country, millions of families are struggling with rising housing costs. In four of the seven swing states — Arizona, Georgia, Michigan and Nevada — more than half of tenant families spend 30% or more of their income on rent and utilities, according to the 2023 American Community Survey.

In North Carolina, voter anxiety about the soaring rents and grocery bills could tip the scales.

“In terms of its political influence, it’s not actually your personal financial situation that is important, it’s your vision of the national economy,” said Matt Grossmann, a political science professor at Michigan State University. “So if I get a raise, I tend to credit myself. If I see higher prices, I tend to blame the government or the current situation.”

Around the corner from Horne’s ice cream store in downtown Rocky Mount, Kristie Hilliard greets a steady flow of customers to her new shop, Kristie Kandies. An armed cop, a nurse in scrubs and waist-high kids trickle in to grab a sweet treat.

After getting tired of her manufacturing job at the local Pfizer plant, Hilliard started making confections at home. As her following grew, she got a concession trailer and now has a storefront selling candied grapes, plums, kiwis and pickles.

Hilliard’s treats have attracted attention on social media, causing some buyers to drive in from as far away as Pennsylvania, she said.

A Democrat, she said she still hadn’t made up her mind on the presidential race. But she doesn’t believe either a Harris or a Trump administration would drastically change much for her business.

“They ain’t doing nothing for me now,” she said. “So, what would change?”

A community divided looks to the future

About 60 miles northeast of the state capital, Rocky Mount lies between the prosperous Research Triangle area and North Carolina’s scenic beach communities.

Railroad tracks and a county line slice through the middle of downtown. On the one side is the majority Black and lower-income Edgecombe County. On the other, the more prosperous and whiter Nash County.

While some officials say long-standing attitudes centered on division are fading, the county line has for decades provided a clear delineation of class, race and politics.

Edgecombe County is a Democratic stronghold, but the more populous Nash County is a bellwether of sorts. It was among the 10 closest of North Carolina’s 100 counties in the last presidential election, and one being closely watched this cycle. With 51,774 ballots cast, President Joe Biden took Nash County by 120 votes.

Around Rocky Mount’s downtown area, stately red brick churches and banks line the wide streets. But just a few blocks away, weeds overtake vacant lots, glass is smashed out of abandoned buildings, and razor wire tops the fencing of no-credit-needed car lots and used tire shops.

While the nearby Raleigh metro area has experienced explosive suburban growth, Rocky Mount Mayor Sandy Roberson said his community has seen an erosion of its middle class with the loss of corporate headquarters and factory jobs.

But he’s optimistic.

Young business owners are investing in downtown. Industries with operations in the Raleigh area are moving east. And both Republicans and Democrats just celebrated the news that Natron Energy plans to build a $1.4 billion electric vehicle battery plant nearby that will employ more than 1,000 people.

“We’ve got a lot of great things that are happening,” the mayor said. “But the key is, how do you build and retain a middle class? Because that’s who does the living and the dying and the investing in a community.”

The mayor’s position is nonpartisan, but Roberson is a Republican who in 2022 ran in the Republican primary for a congressional seat here. This election, however, is a difficult one for him.

Roberson said the economy and his financial position were unquestionably better during Trump’s term, but the Jan. 6, 2021, insurrection and the chaos of the last Trump presidency make him hard to support. At the same time, Roberson worries about Harris’ economic policies; he believes the current administration has accelerated inflation by pumping too much money into the economy.

“At some levels, it feels like I’m voting for somebody who wants to either be a dictator or somebody who wants to create a socialist state,” Roberson said. “And I’m not in either place.”

‘Nobody is immune’

In North Carolina and other swing states, Trump’s television ads hammer the vice president over high prices and “Bidenomics.”

Nash County Republican Party volunteer Yvonne McLeod said the economy, along with immigration, are the top concerns locally. Businesses still struggle to hire, rents have soared and food prices are still up, she said.

“Economically, we’re hurting,” she said.

Democrats must be honest about the financial pressures facing voters, said Cassandra Conover, a former Virginia prosecutor who now leads the Nash County Democratic Party. She noted that Harris ads running in North Carolina speak directly to middle-class concerns.

“Nobody is immune from what’s going on,” Conover said. “She’s telling all of us who are hurting, ‘I know, and we’re working for you.’”

Polling has shown voters are sour on the economy, with 63% saying the economy was on the wrong track in a Harvard-CAPS-Harris poll released this month. Republicans take a far dimmer view than Democrats.

“From past experience, we would expect Harris to inherit some of the blame or credit for the current economy, but so far in the polls, I would say there has been a surprising willingness of voters to not extend the blame for inflation that they had for Joe Biden onto Kamala Harris,” said Grossmann, the Michigan State University professor.

Housing anxiety

Housing costs have outstripped income gains in the past two decades, but those challenges have intensified since the COVID-19 pandemic, when demand increased, construction costs soared and interest rates spiked.

“It doesn’t matter if you’re a buyer or a renter,” said Molly Boesel, an economist at CoreLogic, a financial services information company. “You’re seeing your housing costs increase.”

Affordability is “the No. 1 issue” among voters in Nevada this year, said Mario Arias, the Nevada director of the Forward Party, a centrist political party founded by former Democratic presidential hopeful Andrew Yang.

A resident of the Las Vegas area, 30-year-old Arias said housing is his biggest financial concern. Throngs of Californians have moved into Nevada to lower their housing costs, but it’s driven up costs for everyone else, he said.

“If you want to get out of being a renter, you have to be in not just a good financial situation, but in a very stable financial situation,” he said.

The Federal Reserve cut interest rates last week for the first time in four years, whichcouldopen the housing market to more homebuyers as mortgage rates ease in the coming months.

The Biden administration has proposed several housing-related policies, including incentives to loosen zoning regulations and capping rent increases from corporate landlords. Harris has announced a proposal to provide up to $25,000 in housing assistance for a down payment to some potential first-time homeowners and promised tax incentives that she say’s would lead to 3 million more housing units by the end of her first term, if she’s elected.

Trump has not waded far into the details of how he would address the affordability issue in a second term. He has said he plans to bring down prices by barring immigrants in the country without legal authorization from getting mortgages. But his proposed immigration policies could further reduce the labor force for building homes. Previously, Trump’s administration talked about trying to cut state and local housing regulations, and it suspended federal regulations on fair housing.

In North Carolina, more than a quarter of the state’s households are cost burdened, meaning they spend more than 30% of their income on housing costs. It’s particularly challenging for renters, nearly half of which are cost burdened, according to the North Carolina Housing Coalition, a nonprofit affordable housing organization.

Stephanie Watkins-Cruz, housing policy director at the coalition, noted that the federal government’s calculation of fair market rent in North Carolina has shot up 14% in just one year — and 38% over the past five years.

“So unless everybody and their mama’s getting 14 to 20 to 38% raises, the math begins to not math,” she said.

It’s a familiar challenge in every swing state.

Wendy Winston, a middle school math teacher in Grand Rapids Michigan, said that though no one political candidate is responsible for the state of the economy, the cost of groceries and housing is hard to ignore.

“I don’t think the economy is terrible. It is sometimes difficult to make ends meet,” Winston said. “I don’t believe that it’s the fault of the government or policies of the government. I feel like it’s the individual corporations trying to make profit off the backs of the middle class.”

The average rent for a two-bedroom apartment in Grand Rapids is about $1,550 a month, according to rental site Apartments.com. Though Michigan ranks fairly average compared with other states for rent prices, the state saw some of the steepest rent increases in the country in recent years, and wages have not kept up. Residents unable to rent new, “luxury” apartments find themselves short of options for places they can afford.

“It’s not just cost, it’s availability,” Winston said. “There are a lot of new housing developments. Apartments and condos and things are being built, but I’m priced out of them. And I have a college degree, so I don’t think that’s helping our families.”

Hoping for revival

Back in North Carolina, near the banks of the Tar River, Rocky Mount Mills has a healthy waiting list for the apartments and the revamped homes it rents.

A former cotton mill built and once operated by slave labor, the campus closed in 1996, reopened in 2015 after a $75 million renovation, and is now home to breweries, restaurants and dozens of high-end apartments.

Chapel Hill native and entrepreneur Cameron Schulz never had Rocky Mount on his radar. But the development’s brewery incubator helped him launch HopFly Brewing Co., now one of the state’s largest self-distributing breweries.

After outgrowing its original space, HopFly relocated to Charlotte, but still operates a taproom in Rocky Mount. The Mills project has reinvigorated the city, Schulz said.

“Rocky Mount’s got one of the most beautiful, quintessential downtown strips that I’ve ever seen anywhere,” he said. “We’ve just got to fill it up with cool places to go, and people to go into those places.”

Main Street suffered for decades after the arrival of malls and a highway bypass. Over at Davis Furniture Company, two employees keep watch over an empty storeroom of sofas, beds and home decor.

Co-owner Melanie Davis said business has been good, though she believes customers are anxious about the presidential election. Pointing down the sidewalk to new restaurants and some loft apartments overlooking the railroad tracks, Davis said she’s bullish on the trajectory of downtown.

“I do feel like we’re on an upswing,” she said.

Michigan Advance’s Anna Liz Nichols contributed reporting.

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Home mortgage rates are posted outside a real estate office in Los Angeles after the Federal Reserve interest rates announcement on Wednesday, Sept. 18, 2024. Federal Reserve Chairman Jerome Powell announced a half-point cut to its benchmark interest rate in the first rate cut since the early days of the COVID pandemic.

The Federal Reserve’s first key interest rate cut in four years coincides with another major four-year event: the homestretch of the presidential election.

Fed Chair Jerome Powell downplayed the central bank’s role in the race between Vice President Kamala Harris and former President Donald Trump on Wednesday, in announcing the half-percentage point cut in its benchmark rate. But that didn’t stop the candidates’ campaigns from weighing in, and it could prove a key factor for voters.

“This is my fourth presidential election at the Fed, and it’s always the same. We’re always going to this meeting in particular and asking what’s the right thing to do for the people we serve,” Powell said. “Nothing else is ever discussed.”

The decision to cut for the first time during the Biden Administration indicates the Federal Reserve’s Board of Governors believe the economy has beaten the COVID-19 pandemic-induced wave of inflation that has plagued it since mid-2021. The Fed hiked its key rate 11 times between March 2022 and July 2023.

Inflation peaked at 9.1% in June 2022. The Consumer Price Index, a measure of inflation, rose 2.5% over the past year, according to the latest release from the Bureau of Labor Statistics in August. The unemployment rate was 4.2% in August, down from 4.3% in July, but still much higher than 3.5% in July 2023 when the Fed made its last rate hike.

“We now see the risks to achieving our employment and inflation goals as roughly in balance, and we are attentive to the risks of both sides of our dual mandate,” Powell said.

Wednesday’s was the first in what is expected to be a series of key rate cuts. For now, that benchmark rate is 4.75 to 5%

One member of the Fed’s governing board, Michelle Bowman, dissented with the rest of the group, marking the first time a governor has done so since 2005. Bowman preferred a 25 basis point – or quarter percentage point – cut.

Timing of the rate cut

Both campaigns quickly reacted to the news from the Fed.

Trump, speaking at a crypto-themed bar in New York, said the cut should have been smaller.

“I guess it shows the economy is very bad to cut it by that much, assuming they’re not just playing politics,” the Republican nominee said. “The economy would be very bad or they’re playing politics, one or the other. But it was a big cut.”

Harris, in a prepared statement, was forward-looking.

“While this announcement is welcome news for Americans who have borne the brunt of high prices, my focus is on the work ahead to keep bringing prices down,” the Democratic nominee said. “I know prices are still too high for many middle class and working families.”

Sarah Binder, a senior fellow in governance studies at the nonpartisan Brookings Institution and author of, “The Myth of Independence: How Congress Governs the Federal Reserve,” said there is a long history of presidents pressuring the Fed, from John F. Kennedy to Richard Nixon and Trump, as a president and now as a presidential candidate.

In order to be effective in its role in keeping the economy moving, Binder said, the Fed needs to be trusted as legitimate, and its political support is contingent on doing a good job.

“The Fed doesn’t have the liberty of sitting it out or not doing enough, which can also bring the Fed into politicians’ crosshairs where they really, really don’t want to be,” she said.

Skanda Amarnath, executive director of Employ America, a research group that advocates for full employment, said the Fed should be examining the economic data.

“That’s what they should look at, not where they are in the electoral seasonal cycle,” she said. “I think that’s the case, by and large. I don’t see anything that’s just a real politicization here.”

What a Fed rate cut means for the economy

Many economists and economic advisers have argued for the Fed to cut rates for months to avoid significant damage to the labor market and in the worst case, a recession.

Now, consumers should begin to see lower costs for borrowing money to buy houses, cars and other necessities.

Kitty Richards, senior strategic adviser at Groundwork Collaborative, a progressive think tank based in Washington, D.C., said the Fed should not hold back on cutting rates now that inflation is slowing.

“The Fed pursued four back to back 70-basis-point rate hikes when inflation was heating up. There’s no reason they should allow inertia to hold them back from normalizing rates now that inflation is under control,” she said.

Because shelter makes up so much of inflation, Richards has expressed concern that by keeping rates where they are, mortgage rates have been pushed so high that the housing market is unaffordable for many Americans. This, in turn, affects inflation, she said, creating a vicious cycle.

Dean Baker, senior economist at the Center for Economic and Policy Research, a progressive economic policy think tank, stated that the Fed decision is a good sign for the housing market.

“It is good that the Fed has now recognized the weakening of the labor market and responded with an aggressive cut. Given there is almost no risk of rekindling inflation, the greater boost to the labor market is largely costless,” Baker said in a statement. “Also, it will help to spur the housing market where millions of people have put off selling homes because of high mortgage rates.”

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Inflation is cooling off but the price of housing among other essential items remains high. (Photo by Spencer Platt/Getty Images)

Inflation hit a three-year low last month, just as the presidential election is heating up.

But the high cost of housing and other necessities will keep the economy central to both of the major campaigns, as seen this week in the first debate between Kamala Harris and Donald Trump.

The Consumer Price Index, a measure of inflation, rose 2.5% in the past year, which is the smallest jump since February 2021, according to the latest Bureau of Labor Statistics data released Wednesday. The main driver of this increase was shelter, which moved up 0.5% in August. Airline fares, car insurance, education, and apparel also rose that month. But wages also rose 0.4% in August and 3.8% over the past year, and the average workweek increased by 0.1 hour — welcome news for workers trying to keep up with the cost of living.

Voters continue to say the economy is key in deciding who should be president, at 81%, and four in 10 say the economy and inflation are the most important issues guiding that  decision.

Trump, the former president and Republican nominee, blamed the Biden administration for high prices early on Tuesday’s debate in Philadelphia, falsely claiming the post-pandemic wave of inflation is the worst ever.

“We’ve had a terrible economy because inflation, which is really known as a country buster, it breaks up countries, we have inflation like very few people have ever seen before, probably the worst in our nation’s history,” Trump said.

The worst inflation rate in U.S. history was actually in 1980, at 14%. The current wave – the highest inflation spike since then – peaked at 9.1% in June 2022.

Democratic nominee andVice President Harris responded to Tuesday’s question about the economy by touting tax cut proposals to combat housing costs.

“The cost of housing is far too expensive for far too many people. We know that young families need support to raise their children and I intend on extending a tax cut for those families of $6,000, which is the largest child tax credit that we have given in a long time so that those young families can afford to buy a crib, buy a car seat, buy clothes for their children,” she said.

Harris also pitched a proposal for a $50,000 tax deduction for small startup businesses.

Taylor St. Germain, an economist at ITR Economics, a nonpartisan economic research and consulting firm based in New Hampshire, said the latest data shows inflation is slowing enough to suggest it’s time for the Federal Reserve to start cutting interest rates.

“It’s encouraging to see that inflation is slowing and slowing to these much lower levels,” said St. Germain said. “However, it is, of course, still elevated and one of the reasons it’s still elevated is that shelter costs are driving a significant portion of that inflation, with rents rising as well, especially as we looked at this latest CPI report.”

The Fed began raising interest rates in March 2022 to bring down inflation, raising interest rates 11 times, and made its last rate hike in July of last year.

Economists are watching closely to see if the Fed cuts rates during its meeting next week, which is expected to have an impact on the housing market and other costs.

Kitty Richards, senior strategic advisor at Groundwork Collaborative, a progressive think tank based in Washington, D.C., said the Fed’s decisions are contributing to housing costs.

“The problem with housing is fundamentally a supply problem. And the Fed’s actions are actually making that supply problem worse by locking up the housing market and making it more expensive to buy, build or rehab housing,” she said. “Housing is such a big part of people’s experience of the economy and it really matters to folks when they might want to move and look around and they can’t. They can’t even afford to buy a house that is the same price as the house they live in because the interest rates are so high.”

This story has been updated to correct Kitty Richards’ title. She is senior strategic advisor at Groundwork Collaborative.

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