Inflation concerns have been heavily weighing on voters as the latest data from the Commerce Department shows easing price pressures. The Federal Reserve’s preferred measure of inflation rose just 0.1% from July to August, falling to 2.2% from a year earlier, just above the Fed’s 2% inflation target. This decline in inflation may be impacting former President Donald Trump’s advantage on the economy in polls, with voters now split on who would do a better job on the economy, Trump or Vice President Kamala Harris.
The Federal Reserve has cut its benchmark interest rate in response to declining inflation and is expected to make further cuts throughout the year. Policymakers foresee several more rate cuts in the coming years as inflation continues to cool. Consumer spending has been tepid recently, with modest income and spending increases and an increase in the savings rate. Despite this, the economy is still growing at a healthy pace, with strong consumer spending and business investment.
Individual economic indicators, such as a decrease in unemployment benefits applications, increased retail spending, rebounding industrial production, and rising consumer sentiment, suggest that the economy is still resilient. The brighter outlook for consumers is attributed to more favorable prices for big-ticket items like cars and appliances.
Overall, the decline in inflation and positive economic indicators suggest that the Fed will continue cutting interest rates to support economic growth, potentially impacting voter perceptions of Trump and Harris on the economy in the upcoming election.
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