Election watchers are always waiting for the “October Surprise” that could have a last-minute effect on the election.
It could be that the hateful attack on Puerto Rico and Latinos that was the worst of many examples of bigotry in Trump’s Madison Square Garden rally will be the October Surprise of this election. As 8% of the Pennsylvania electorate is Latino and the majority of them are of Puerto Rican descent, this event may cost Trump Pennsylvania. A shift of only 5% of the Puerto Rican vote from Trump to Harris could add up to 30,000 votes which could be her margin of victory.
But there is another October Surprise that has been gradually brewing and is likely to get some attention the weekend before the election: we are in the midst of an economic boom.
Tomorrow, on October 30th, gross domestic product numbers for the third quarter were released today and show that the economy is growing at an annual rate of 2.8%. This rate of growth is extraordinarily good, especially after so many economists feared that getting inflation under control would lead to a recession. It’s a higher rate than we have seen in some time.
And inflation is under control. The last monthly report showed it increasing at an annual rate of only 2.4% on an annual basis, almost at the Fed’s target of 2%.
With the growing economy and inflation under control, after-tax income per person has risen at a pace of about 2.6% in the last few months, back to where it was before the pandemic.
And, even better, this growth rate in after tax income is higher than what the nonpartisan Congressional Budget Office expected before the pandemic we would achieve in 2024. They expected that real incomes per person would be about $51,000 now. But it is above $52,000.
Higher income has led to higher consumption. In the past six months, consumption adjusted for inflation is 2.8% above what it was last year. Consumers appear to be confident about the economy.
And that consumption is not driven by higher debt. Revised figures show that the personal savings rate is now about 5%, twice what it was in early 2022.
All this good economic news is supported by a strong labor market. The unemployment rate has dropped for two months and is now at an historically low 4.1%. Even more impressive, the labor-force-participation rate for prime age workers, between 25 and 54, is about 84%, almost a record high.
So, the economy is not only strong, but is also likely to stay strong. Americans are benefiting from it. And they will hear how good it is right before the election.
Now this won’t change the mind of Trump acolytes who believe his doom-and-gloom-filled lies. And, frankly, it won’t end the difficulties low income working people have in meeting the high costs of housing and child care, or the high costs faced by those going to college. It won’t necessarily overcome the memory of lower prices before the post-pandemic recession.
Nor will it overcome forty years of an economy that has increasingly benefited wealth, not work. Fixing THAT problem is a long-term effort, one we wish Kamala Harris had been talking about more during her campaign and that she should address if she is elected president.
But in a close election, some good economic news could make the difference in the seven battleground states. And that’s an October surprise that could help Kamala Harris be elected.
P.S. One of the sad things about the timing of our elections and our economy—and the inability of most voters to distinguish between things that our presidents are and aren’t responsible for—is this.
If Trump is elected, he will get credit for the really good economy Biden’s policies created.
Just like he got credit for the really good economy Obama’s policies created.
And Biden got the blame for the post-pandemic inflation, which was actually lower in the US than in any other advanced country, even as the US economic recovery from the pandemic recession was faster and stronger.
Amazingly, enough people don’t blame Trump for the pandemic recession. That’s mostly fair as it was a worldwide problem even though he probably made things worse with his denial of the seriousness of COVID and crazy medical advice.
But life and politics are not fair. If it were, the American people would be giving Biden credit for this economic recovery and giving Obama credit for the good economy under Trump.
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