For Harris, economic worries pose challenges to presidential campaign

Even before the markets closed Monday, former President Donald Trump saw opportunity in Wall Street's biggest slide in two years. He took to Truth Social to slam his Democratic opponent, calling the 1,000-point plunge "The Great Kamala Crash Of 2024."

In reality, it's difficult to make the case that a president or vice president is responsible for major moves in the stock market. And economists warned against making too much of two bad days.

"The first thing I'd say is, 'what crash?' " said Mark Zandi, chief economist at Moody's Analytics. "Stock prices go up, they go down, they go all around."

Zandi said the sell-off was the result of investor nervousness over possible slowing of the U.S. economy. Critics fear the Federal Reserve may have waited too long to lower interest rates, after a long period of increases to try to get inflation under control.

While stock prices dropped about 10% from their record high a few weeks ago, sparking unease among investors and anyone with a 401(k) retirement plan, "they're still up 15% from where they were a year ago and a lot, lot more than they were when Biden took office," Zandi said.

Even so, the decline on Wall Street could help Trump. While Vice President Kamala Harris has closed the gap with Trump nationally and in most swing states, poll after poll show the economy is a top concern among voters and a majority trust Trump on the issue more than President Joe Biden, and now, more than Harris. Steve Koczela, president of the MassINC Polling Group, said Trump benefits from a historic advantage Republicans have — at times without merit — when it comes to the economy.

"It's not the case that Republican presidents have necessarily done better on the economy, but there is this stable perception among more voters that Republican presidents do better on the economy," Koczela said. "At the moment, Trump is clearly benefiting from that."

That's true despite multiple signs that the economy is actually doing pretty well. The Harris campaign touts robust job growth over the past three-and-a-half years and the lowest unemployment rate in a half century. Also, inflation is way down since it peaked during the pandemic.

Still, many Americans are feeling the burden of higher prices, and Harris is noting that in campaign speeches. At a recent appearance in Atlanta, she said, "To keep our middle class strong, families need relief from the high cost of living so that they have a chance — not just to get by — but to get ahead."

For his part, Trump blames concern about the economy, including inflation, on Democrats, and it's a potent talking point among his followers. Daren Smith of Plastow, New Hampshire, at a Trump rally this winter, said he was upset about high prices and complained that inflation will shrink the spending power of his retirement account.

"Everything you worked for is going away," he said.

Smith said he feels the weight of higher prices every day, and he's not alone. Zandi, the economist, said that while inflation has cooled, prices on necessities, including groceries, rent and gasoline, are as much as 25% higher than they were a few years ago.

"So, I think people are still feeling the sting of those higher prices," he said.

Despite Trump's claims that he can “fix” inflation, Zandi says the Federal Reserve has the responsibility to set interest rates, not presidents. Trump has not said what concrete moves he would take to tackle higher prices.

Still, high prices are real — people feel them — and they're providing a potent issue for Trump, according to Amy Walter with the Cook Political Report. She believes the economy looms large in the presidential race; while Harris has pulled even with Trump, Biden was running several points ahead of him at this point in the election four years ago.

"What is it that is preventing her from being where Biden was in 2020?" Walter said. "I'd argue that it’s worries about the economy."

In response, she said, Harris and the Democrats are trying to build a case against Trump, "that he and his temperament are a central problem — that Trump himself is only going to look out for the wealthiest and for himself."

In other words, if the election comes down to a referendum on the economy, it's advantage Trump. If Democrats can make this a referendum on Trump, they believe they could win.