This election season, voters are laser-focused on one big issue: the economy. Americans rank inflation as the most important problem facing the U.S., followed by jobs and the overall economy, an October Ipsos/Reuters poll found.
In the last year, Americans aimed to go back to dining out, traveling and enjoying in-person events, which became scarce in the early days of the Covid-19 pandemic. But skyrocketing prices for everything from eggs to airfare, as well as uncertainty about the future, put a damper on many of those plans.
Voters may be divided on a lot of issues, but they all seem to agree that money and how the government affects it need to be addressed. When asked what single message voters hope to send politicians with their votes this year, the responses tied for No. 1 are “be more effective and do more” and “fix the economy and reduce the cost of living,” an NBC News poll found.
With that in mind, here’s a look at three of the top economic issues facing the U.S. right now.
1. The growing cost of living
The consumer price index sitting comfortably at 40-year highs has consumers frustrated and pinching pennies to make ends meet. Elevated prices on essentials like gas and groceries make it difficult to find places to cut back.
Workers have seen huge wage gains over the last year, with hourly earnings up 5% in September from the previous year. Still, that’s not enough to keep up with inflation.
The Federal Reserve’s rate hikes aim to get inflation under control. In the meantime, voters want to see Congress and the White House tap in.
Change to personal incomes has historically been one of the most reliable election predictors, says Stephen Ansolabehere, a government professor at Harvard and expert in elections and politics.
“Even though incomes are going up, inflation is reducing it in real terms. That’s what’s hurting the Democrats,” Ansolabehere tells CNBC Make It. “Whether inflation has to do with something that the administration did, that’s not something voters actually care about. It’s more about, ‘Am I better off?'”
2. The looming possibility of a recession
While bright spots like low unemployment and a rebounding gross domestic product (GDP) show some resilience on fighting off an impending recession, voters and experts aren’t feeling optimistic about avoiding one altogether.
Bloomberg economists recently pegged the probability of the U.S. entering a recession within 12 months at 100%. And less than a third of voters expect the economy to improve in the next year, according to a CNBC poll.
Layoffs haven’t spread through the job market yet. All the same, 91% of CEOs expect a recession in the coming year, according to a KPMG survey of 1,325 CEOs between July 12 and August 24, 2022. And 52% of CEOs said conditions in their own industries were worse at the start of the fourth quarter, a survey from non-partisan think tank The Conference Board found.
Despite reports administration officials were beginning to explore recession response plans earlier this month, Biden celebrated the third quarter GDP reports and insisted Republicans would try to undercut that progress.
The Fed continues to raise interest rates in its effort to curb inflation, but those rate hikes could tip the U.S. into a recession if higher borrowing costs cool demand too much.
Even if the Fed is technically to blame for sending the country into a recession, voters will likely look to their elected leaders for solutions.
3. The volatile stock market
The stock market is not a full picture of the economy, but its performance certainly matters to voters. Watching their portfolios swell as pandemic recovery efforts took hold, only to bust and remain volatile through 2022, has many consumers re-thinking retirement plans and worried about their futures.
The stock market will remain up-and-down until there is a clear idea of what the government is doing, Harvard’s Ansolabehere says. Tax reform and changes to funding for social programs like food stamps and Medicare can affect consumer budgets and lead to more market uncertainty.
“There are things Congress shouldn’t do, and things that they can do in terms of creating a more stable situation,” Ansolabehere says. “What Wall Street wants is certainty. They want to be able to expect what Congress is going to do in terms of budgets and taxes.”
Finding that stability could be challenging. If Democrats lose the House, Congress could gear up for another debt ceiling standoff that may threaten to shut down the government or push the country to default on its debt, The Washington Post reports.
The war in Ukraine, another Covid surge and climate change could slow down or undo progress toward a full economic recovery, where prices come back down to earth and checking your 401(k) isn’t so gut-wrenching. But it’s up to voters to decide who’s best to handle these issues.
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