US: A series of economic data brought good news for Kamala Harris

US: The debate between Vice President Kamala Harris and former President Donald Trump on Tuesday was widely regarded as a victory for Harris, but the most encouraging news Harris received this week came from a set of economic statistics that collectively indicate the nation has finally turned the corner in its protracted battle against inflation.

The Bureau of Labor Statistics announced on Wednesday that the Consumer Price Index (CPI), which is regarded as the gold standard of inflation readings, increased by just 0.2% in August, bringing annual inflation down to 2.5% — its lowest level since early 2021. This news comes as voters continue to prioritize the economy ahead of Election Day.

Millions of Americans struggling with increasing prices were given some respite when inflation surprised economists by declining more than expected.

Furthermore, fresh data on consumer sentiment released this week by the University of Michigan indicates that Americans’ optimism about the US economy has risen for the second straight month, reaching a four-month high.

Donald Trump has often used increasing prices as a focal point of attack in his campaign, accusing President Joe Biden and now Kamala Harris of producing inflation during the epidemic via excessive government spending.

According to polls, this argument is persuasive because more Americans believe Trump than Harris when it comes to economic matters, particularly because food costs are still 21% higher than they were three years ago.

Harris was only up by one point nationwide, which may be explained by the fact that Trump topped Harris by 13 points on the economy, according to the most recent New York Times/Siena College survey.

However, it’s an attack line that could soon be neutralized given that inflation is approaching the Federal Reserve’s target level and the central bank is anticipated to launch an aggressive round of interest rate reductions next week.

“Trump is losing one of his primary defenses against Harris as inflation eases to more ‘normal’ levels. This may sway voters who aren’t sure whether to support her, according to Luis Cabral, an economics professor at New York University.

The Labor Department’s CPI data on Wednesday showed the lowest rise in prices since February 2021 and the sixth straight annual price decline. Monthly price increases were just 0.2%.

American consumers, who were severely impacted by price shocks beginning at the height of the epidemic three years ago, have been feeling the effects of decreasing inflation for some months now, particularly with regard to necessities like food, petrol, and rent. Midway through 2022, inflation peaked at 9.1%, the highest rate in forty years.

Even while core inflation, which excludes the more erratic categories of food and energy, was only marginally lower at 3.2% overall, the Fed should be able to begin lowering interest rates as it has predicted. Consequently, for the second consecutive month, Americans’ view on the economy has improved.

Even if Americans’ purchasing has been stable amid low confidence levels in previous polls, rising consumer confidence often signals a higher desire to spend.

The Fed’s goal level, Carl Weinberg, chief economist at High Frequency Economics, said in a note to clients on Wednesday. “Today’s report will add to confidence within the Fed that inflation is indeed on a sustainable path towards 2%,” Weinberg wrote.

In the meanwhile, the percentage of consumers who believe interest rates will decrease over the course of the next year has increased to 54%, the most since records have been kept in 1978. At its meeting next week, the Federal Reserve is anticipated to lower interest rates by a minimum of a quarter percent. This action will help drive down the cost of loans for everything from autos to mortgages. As a matter of fact, those rates are already falling precipitously in expectation.

Grocery prices online saw the biggest decline in a decade.

It should come as no surprise to any American who has shopped at a supermarket in the past three years that food inflation has played a significant role in both the presidential campaign and the rise in living expenses.
Republicans and Donald Trump have made a point of pointing out that during the last three and a half years, the cost of food has increased by around 21%, despite the fact that essentials like bacon and eggs have become more expensive.

However, it seems that the shock of the store label is also lessening. According to a survey released this week by Adobe Analytics, food costs fell significantly in August, with online grocery prices down by 3.7%. After years of price hikes brought on by the epidemic, consumers are receiving much-needed respite from this, the greatest monthly reduction in a decade.

“Though grocery prices are still slightly up year-over-year, the August drop suggests the worst of the inflationary pressure on food costs may be behind us,” Adobe said. Grocery costs surged by almost 14% in 2022, but new data indicates the opposite is already occurring.

Even while this is unquestionably excellent news for any government in office, people may not feel the effects on their wallets by November. Newsweek quoted George Washington University Professor Todd Belt as saying, “Even though inflation is slowing, grocery bills are still high, gas prices remain expensive, and people are feeling the pinch.”

Rates for Shipping Containers Drop to All-Time Lows

An other underreported event that affects consumers and companies equally is the historically rapid reduction in shipping container prices, which peaked in early September.

Ole Hansen, a commodities expert, reported the “biggest one-week drop in container rates in history.”
Retailers and importers should be encouraged by this trend since reduced transportation costs mean cheaper freight and product prices. The logistics and supply-chain portal Loadstar reports that shipping charges on major trade routes have dropped by up to 60% year over year as a result of improved supply chain conditions and decreased global demand.

It is anticipated that customers would gain from the trend by getting cheaper items, which will reduce inflation.
The decline comes after a period of very high and low prices, during which shipping costs per 40-foot container reached over $20,000 during the pandemic and then dropped to around $1,200 by the middle of 2023.

Disney Drops Streaming Charges

Although it may not be part of either candidate’s political platform, the media conglomerates that own the majority of streaming services have started modifying their pricing policies in an effort to draw in new customers.

Disney reduced the monthly cost of its ad-tier streaming service to only $1.99 for both new and existing users this week. Through September 27, there is a special that gives three months of service for $18 less than the regular price.

The easing of inflationary pressures on discretionary expenditure coincides with the discounted rate.
Naturally, this offer coincides with Disney+’s announcement of yet another price increase, marking the fourth in as many years. The ad-free tier was formerly priced at $6.99, but it is now $15.99, more than twice as much as it was in 2019.

In contrast, Netflix’s strategy of introducing a free, ad-supported tier has been very successful; as of May, almost 40 million customers have selected that choice.

$5 Value Meal Extended by McDonald’s

Many consumers continue to prefer eating at home despite costs down and inflation slowing down; this trend is beginning to negatively impact the profit margins of many fast food and fast casual establishments.

As a consequence, rival restaurants are probably going to follow McDonald’s lead and announce this week that it is extending its $5 value meal until December at the majority of its U.S. locations.

Following a dismal first quarter marked by fewer visitors to the United States and reduced order spending, McDonald’s launched the partnership in June, focusing on consumers making less than $45,000 annually.

Joe Erlinger, the president of McDonald’s in the United States, said on Thursday, “We’re committed to keeping our prices as affordable as possible together with our franchisees.”

The Golden Arches have extended the agreement twice; the first time, it was only supposed to last one month.

Sub-$3 Gas: When Will It Happen at a Pump Near You?

With crude oil futures trading around their lowest point since December 2021, there is a chance that the $3.23 national average price of gasoline may soon go below $3 per gallon.

The announcement this week that OPEC will cut its demand projection for the second time in two months, along with weak economic statistics from China, has caused the price of oil futures to collapse, which is probably going to result in reduced gas prices.

In spite of a storm in the Gulf of Mexico that would usually cause futures to rise, Bob Yawger, executive director of energy futures at Mizuho Securities, said in a note to clients on Tuesday that China and OPEC delivered a “knockout blow” for the oil sell-off.

Given the turmoil in the Middle East, it is quite unlikely that geopolitical events would stifle this trend. If it does, the decline in gas prices will alleviate pressure on the cost of products and transportation, perhaps in time for the election.

There were more indicators of a thriving economy than those mentioned above.

The Census Bureau said on Tuesday that the median income of American families, adjusted for inflation, increased to a level about equivalent to that of 2019. Ahead of the Fed decision next week, 30-year mortgage rates are at their lowest since early 2023, while the S&P 500 finished the week almost at all-time high. And because to rising property prices and a booming stock market, the average net worth of an American family reached a record, the Federal Reserve said this week.

As the Harris campaign continues to gain momentum following Tuesday’s debate and the initial post-debate polls indicate a slight but noteworthy increase for the Democratic nominee, these seemingly unrelated but connected bits of good economic news may give her a major boost as the election season approaches, provided she can effectively communicate them to the American people.