An October surprise can end a presidential campaign. Democrats might be sitting on one to end Donald Trump.
But Trump was just tipped off on a Democrat plan to drop this big October surprise.
It is utterly shocking how aware the Biden-Harris administration is about the negative impact their policies have had on the American economy and how damaging the past few years have been for average Americans. They know what it is that they are doing to put American families in a bad spot financially.
One of the most negatively impactful policies of the Biden-Harris administration on the economy has been the exploding interest rates controlled by the Federal Reserve. This has caused a housing crisis as corporations can avoid high interest rate loans by buying houses with cash offers quicker than Americans can put in an offer and get it accepted.
The increase in interest rates has also hurt certain industries by forcing their hand in slowing down economic activity. This results in certain industries offering fewer jobs or maybe even having to cut workers.
Joe Biden and Kamala Harris know this. They know that dropping the rates right now would actually be a good thing for the economy. So what are they planning? Well, reports are that the Biden-Harris Federal Reserve is considering the first rate cut in ages just before the election. Convenient timing.
Potential Federal Reserve Interest Rate Cut on the Horizon
In a recent press conference, Federal Reserve Chairman Jerome Powell indicated that an interest rate cut at the Federal Open Market Committee (FOMC) meeting in September is a possibility. This announcement follows the Fed’s decision to maintain the federal funds rate target range between 5.25% and 5.5%, marking the eighth consecutive meeting without a rate adjustment.
Investors are largely anticipating a rate cut at the FOMC’s next meeting, according to the CME Group’s FedWatch Tool, which shows a 100% expectation among interest rate traders. The timing of this potential cut, less than two months before the November presidential election, aligns with market predictions.
Powell’s comments emphasized that the decision would depend on upcoming economic data. “The question will be whether the totality of the data — the evolving outlook in the balance of risks — are consistent with rising confidence on inflation and maintaining a solid labor market,” he said. “If that test is met, a reduction in our policy rate could be on the table as soon as our next policy meeting in September.”
Inflation and Labor Market Trends
Recent economic data has shown signs of easing inflation and a softening labor market. Inflation dropped to 3.0% year-over-year in June, down from 3.3% in May, yet still above the Fed’s 2% target. The inflation rate was at a mere 1.4% when President Biden took office in January 2021, but it peaked at 9% in June 2022.
The labor market has also shown slight changes, with the unemployment rate increasing marginally from 4% to 4.1% in June. Despite this, Powell noted that labor conditions are returning to levels seen in 2019 and that the labor market is no longer a primary driver of inflation. “Inflation has eased, but remains over [the Fed’s] stated goal of 2%,” he added.
A potential reduction in interest rates could lead to a surge in stock prices, as lower returns on U.S. treasury bills make equities more appealing to investors. Additionally, lower rates reduce borrowing costs, potentially increasing purchasing power for businesses and consumers, and spurring economic growth. This economic boost could be advantageous for the Democratic party in the upcoming presidential election, as a strong economy typically benefits the incumbent party.
Americans have been facing high borrowing costs, with credit card delinquency rates reaching their highest level since 2012 in the first quarter of 2024. Approximately 2.59% of credit card balances were more than 60 days overdue, and total revolving balances hit a record $628.6 billion.
Powell acknowledged the committee’s growing inclination towards a rate cut. “The broad sense of the committee is that we are getting closer to the point at which it would be appropriate to reduce our policy rate,” he stated.
As the September meeting approaches, all eyes will be on the evolving economic data and the Fed’s response to these indicators.
If they do cut the rates, fully expect the Kamala Harris campaign to put that feather in their cap as a “win” for how they are working “for the American people,” even though they have intentionally kept rates high for what feels like a million years at this point.
Stay tuned to the DC Daily Journal.
