On The Money — Five things to know about the economy before voting
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Tonight, we’re giving you a cheat sheet to five key things voters should know about the economy before heading to the polls tomorrow. We’ll also look at the recent dive in the wholesale price of used cars, a record drop in consumer confidence in the housing market, and more.
But first, here are five big questions that tomorrow’s results might answer.
Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Aris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.
What to know about the economy before midterms
President Biden made a big bet on an economic rebound when he took office in January 2021, just as the U.S. economy was ramping up its recovery from the COVID-19 recession.
The combination of a $2 trillion stimulus package passed in March 2021, the Federal Reserve’s refusal to raise interest rates and a swift vaccine rollout helped power the U.S. to two years of stellar job growth and steady consumer spending.
But the high inflation left in its wake — driven largely by factors outside Biden’s control — has damaged some of the benefits of the bounceback for many American households.
Here are a few things you need to know about the U.S. economy before Election Day:
The job market is still strong, but may be losing steam: No president before Biden has presided over such a strong labor market. The October jobs report showed the U.S. gained 261,000 jobs last month, but with the newest data came some signs of a looming slowdown. Unemployment rose despite the labor force staying the same size, and some key industries affected by higher interest rates backtracked.
Inflation has been hard to quash: The U.S. economy has avoided the long, grueling recovery from the pandemic-driven recession that has left other nations much worse off. But the U.S. hasn’t been able to avoid the global surge of inflation driven by the whipsawing global economy and efforts across the world to stabilize it.
Economic growth has flatlined: Despite Republican claims to the contrary, the U.S. was not in a recession earlier this year when GDP turned negative, thanks largely to the booming jobs market and steady consumer spending. But the latest look into economic growth showed sharp declines in some business spending and a plateau in domestic consumption.
Sylvan has what else voters need to know here.
AUTO PROFIT
Wholesale used car prices plummet as retail prices soar
The wholesale price of used cars is falling off a cliff while the retail prices that car shoppers are paying is way up, suggesting dealers are making a killing while consumers are taking a bath.
Used car prices declined 2 percent from September in the first half of October and are down 10.3 percent from a year ago, according to The Manheim Used Vehicle Index published on Monday.
Wholesale used luxury car prices are down 13.5 percent while used sport utility vehicles are down 12.3 percent and pick-up trucks are down 8.4 percent.
But the retail price that car shoppers are paying for used cars has increased 7.2 percent since last year.
“Dealers don’t have to pass it on. They can make bigger profits,” said Claudia Sahm, a former Federal Reserve banker and founder of Sahm Consulting. “At the end of the day, inflation and how much prices go up – these are decisions made by businesses. Inflation does not just come down from on high.”
Tobias Burns has more here.
ANOTHER NEW LOW
Americans’ confidence in housing market reaches record low
Consumer confidence in the housing market hit a new low last month as persistently high home prices and rising mortgage rates continued to cool the once hot housing market, according to data released Monday.
Only 16 percent of buyers in October said they thought it was a good time to buy a home, Fannie Mae’s monthly Home Purchase Sentiment Index revealed.
That marked a new low since the index was first published in 2011.
Meanwhile, the percentage of buyers who said it was a good time to sell decreased by 8 percentage points to 51 percent.
“Consumers are increasingly pessimistic about both homebuying and home-selling conditions,” said Doug Duncan, Fannie Mae’s senior vice president and chief economist.
Adam Barnes has the details here.
CLOCK’S TICKING
When could student loan borrowers know if they’re actually getting relief?
Millions of student loan borrowers find themselves on tenterhooks, waiting to see if they will actually get the relief proposed by President Biden as challenges to his debt forgiveness plan work their way through the courts.
Experts say that borrowers will get a decision from the U.S. Court of Appeals for the 8th Circuit soon.
That court is hearing a challenge from six GOP-led states, which is the only lawsuit that has been successful so far in stopping the program, at least for now.
The court’s determination on whether the states have standing could be key to whether the administration will be allowed to provide relief in the next couple weeks or months from now, if at all.
Lexi Lonas and Jared Gans have more here.
Good to Know
The average credit card interest rate for retail stores has hit a record high of
26.72 percent while general purpose credit cards now charge an average of
22.6 percent, according to a study released Monday by industry group Creditcards.com.
The rise in annualized percentage rates comes as the Federal Reserve is raising the rates at which banks can borrow money from each other, making financing more expensive throughout the economy.
Other items we’re keeping an eye on:
Online secondhand sellers are pushing to repeal a new tax reporting threshold included in the American Rescue Plan that requires them to report transactions over third-party networks that exceed $600 — a considerable shift from the previous $20,000 threshold.
High inflation is increasingly creating major strains on all Americans, including those with higher incomes than others, according to a Wall Street Journal poll.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.
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