Crashing stocks, rising unemployment and escalating hostilities in the Middle East are about to pop the Kamala Harris bubble and could well put Donald Trump back in the White House.
Democratic strategist David Axlerod says the excitement over Vice President Harris’ campaign is a sign of "irrational exuberance." He’s right. So far, she has coasted on media hype, careful to avoid serious policy discussions; with the world blowing up around us, that cannot continue.
Today, in the midst of unsettling turmoil, Kamala Harris or Joe Biden should be addressing the American people. So far, not a word.
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Stock markets are plummeting around the world, because:
1. The U.S. economy is slowing and joblessness is rising, signaling a possible recession.
2. Iran is threatening to attack Israel, leading many to fear a widening conflict in the Middle East.
3. The United States is leaderless. Neither Joe Biden nor Kamala Harris is capable of providing the reassurance or the solutions that Americans need in troubled times.
Stocks have sold off sharply in the U.S., with investors losing over one trillion dollars. The rout is global; Japan just experienced its worst trading day since the global crash in 1987. The VIX, aka Wall Street’s "fear gauge," hit one of its highest levels ever.
For months there have been signs that the U.S. job market was weakening. Unemployment claims, while still low, have been rising, wage growth has been slowing and the number of jobs available has tumbled. Last Friday, the government reported that the economy added only 114,000 jobs, considerably below the expected 175,000. Reacting to that news, Goldman Sachs’ economists raised the odds of a recession occurring over the next year, to 25% from 15%. Though still low, experts agree that risks are rising.
This is a political minefield for Vice President Kamala Harris. The Biden-Harris White House has consistently touted job creation and low unemployment as their crowning achievement; in 2023 the jobless rate dropped to 3.4%.
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Today, however, it has jumped to 4.3%. Some economists think that increase may indicate the start of a recession. Looking back at the last several downturns, unemployment typically rose half a percentage point or more in the beginning months; as economist Ed Hyman at ISI Evercore has often noted, "Everything is fine until it isn’t." That is, hiring frequently continues to be brisk right up until it falls out of bed.
That is what Federal Reserve Chair Jay Powell has been trying to avoid. He has sought a "soft landing," trying to avoid a downturn while slowing the economy and squashing inflation by sharply raising interest rates, starting in September 2022. That balancing act rarely succeeds, in part because monetary policy works with "long and variable lags."
Inflation peaked at 9.1% in June 2022 but fell last year as supply chains unraveled and China’s economy weakened, reducing demand for numerous commodities including oil. This past January, the consumer price index stood at 3.1%, indicating that Powell’s tough medicine was working. However, price increases bounced up again in the spring, causing the Fed to hesitate in starting to cut interest rates.
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That delay is controversial. Many, including prominent Democrats like Elizabeth Warren, are furious that Powell didn’t cut rates earlier. They know how damaging a recession could be to Harris’ campaign.
Almost certainly Kamala Harris will join that chorus, trying to shift the blame for any downturn that materializes. How else will she respond if the economy goes into a slump?
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Who knows? Kamala Harris’ economic policies are a mystery. There is still no official campaign website posting her positions on critical issues. Since being lobbed into the race by Democrat power brokers, she has not yet given an interview or held a press conference. The few unscripted remarks she has made have many voters pining for the return of Joe Biden.
What we do know does not inspire confidence. Here’s her view on one economic move made by the Biden-Harris White House: "We invested an additional 12 billion dollars into community banks because we know community banks are in the community."
Asked about inflation in numerous interviews before becoming the Democratic Party's 2024 nominee, Harris delivered confusing platitudes about how the White House was taking higher prices "very seriously" and, again, "very seriously."
But she offered no solutions while affirming on numerous occasions that "Bidenomics is working." Responding to the disappointing jobs report, the Harris campaign seemed to blame Donald Trump, out of office for over three years.
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Kamala Harris appears to be a fan of Big Government solutions and has partnered with President Joe Biden on passing trillions of dollars in unneeded spending bills that drove prices sky-high and our fiscal deficits through the roof. She has also joined Biden in blatantly lying about the economy they took over, tell voters it was in free fall; in fact, it was growing at over 6% with inflation of less than 2%.
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Not once has she or President Joe Biden acknowledged that government spending is way out of whack with historical norms; their answer to narrowing our deficits is not to cut outlays but rather to raise taxes. According to the Tax Foundation, Harris wants even "steeper tax hikes and more aggressive redistribution through the tax code than President Biden."
In her 2019 campaign, Harris embraced numerous progressive measures including the Green New Deal, Medicare for All, and banning fracking and offshore drilling -- positions which she has since largely abandoned. She dives into class warfare when convenient, decrying tax cuts for billionaires, and hews to the progressive (and inaccurate) view that inflation is caused mainly by greedy corporations.
Some insight may come from Kamala Harris’ father, an "unashamedly Marxist" economist whose work explores "the pitfalls of relying on profit-seeking capitalists to direct an economy." Has Kamala adopted her father’s views?
We don’t know, but pretty soon she will have to tell us. And that could spell the end of Kamala Harris’ honeymoon.
