Article Summary –
The key issues to be addressed in the upcoming televised debate between President Biden and former President Trump are expected to revolve around economic policies, including inflation, government spending, and trade. Inflation has been slowing after peaking at 9.1% in the summer of 2022, with rising prices for several commodities due to increased demand and limited supply. Despite the inflation surge, the U.S. economy has been unexpectedly strong, with a robust stock market, low unemployment, and strong wage growth, with immigration contributing to the labor market, though it has created challenges in housing and other areas.
Economic issues to take center stage in televised Biden-Trump debate
Thursday’s televised debate between President Biden and former President Trump will likely be dominated by economic concerns such as inflation, immigration, and government taxing and spending. As both candidates are known to make sweeping claims on these issues, it’s useful to understand the current economic data and latest research.
Inflation: High but slowing
Due to the pandemic and its aftermath, inflation surged when the government injected more than $5 trillion into the economy. Consumers started spending their stimulus checks and savings, creating a burst of demand that led to supply chain disruptions and price increases. Russia’s invasion of Ukraine in 2022 pushed gas and food prices up while some key services, such as rent, started to climb. Despite these challenges, inflation is now slowing, but prices are not broadly coming down.
Strong U.S. economy despite rapid inflation
In the face of rapid inflation, the U.S. has experienced solid economic growth, with consumers continuing to spend and the stock market performing strongly. Unemployment has been at or below 4 percent since late 2021- the longest stretch of such low unemployment since the 1960s, and wage growth is robust.
Immigration: A boost for the labor market with growing pains
Immigration has played a significant role in the labor market, with an estimated two million people immigrating to the U.S. this year, twice the average rate. Despite negative voter sentiment, high levels of immigration have offered economic benefits, providing a source of potential workers to employers who are eager to hire, boosting economic growth, and even helping the nation with its debt load.
Exploding national deficit and debt
The budget deficit in 2024 is projected to be $1.9 trillion, up from a forecast of $1.6 trillion earlier this year, leading to a rapidly growing national debt pile. Policy changes, such as a sudden halt or reversal in immigration, could cause painful labor shortfalls and shortages in key industries — pushing up prices.
High interest rates outside of political control
The Federal Reserve, which sets the nation’s interest rates, initially expected to cut borrowing costs several times in 2024, but revised their forecast due to persistent inflation. High rates hurt shoppers who have to pay more for car loans, mortgages, and credit card debt.
Trade policy: Tariffs embraced by both parties but at a cost
Trade policy is likely to be a prominent topic during the debate. Both Trump and Biden have imposed tariffs on trading partners, particularly China, to foster U.S. manufacturing and secure more resilient supply chains. However, tariffs are often passed on to shoppers and research suggests that U.S. importers and consumers have largely borne the brunt of these tariffs.
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