Don't Panic: The Economy is Indeed Going to Crash

A Harris Victory is NOT a Given. Especially when the Economy Collapses

It’s natural for some to panic after a political convention, especially when the media spins it as a boost for the opposing candidate. But let’s step back for a moment. Harris’s performance so far doesn’t warrant the level of alarm I’ve seen from some in our camp. The data tells a different story, and we need to stay calm and focused on the bigger picture.

Because the bigger picture is AWFUL for the economy and THAT will be the deciding factor.

The Polls: Harris’s Weak Standing

Right now, Kamala Harris is only leading by 2.5 points. For comparison, Biden had a much larger cushion in 2020, leading by 7 to 9 points at the same time. Even Hillary Clinton enjoyed a 5 to 6 point lead in 2016. Historically, Democrats prefer to see a lead of at least 3 to 5 points heading into the final stretch. So, Harris is significantly underperforming compared to her predecessors. While the media is hyping her convention bump, the reality is that her polling lead is far from secure.

Economic Trends to Watch

The economy is the real story heading into this election. Sure, Q2 2024 GDP growth came in at 2.8% annualized, which sounds good on the surface. But dig a little deeper, and you’ll see that real GDP is still lagging behind pre-pandemic trends, signaling a longer-term slowdown. The goods economy actually contracted in Q2, both in real and nominal terms. Inventories surged, artificially inflating GDP growth by 0.82 percentage points.

The labor market isn’t looking much better. Unemployment rose to 4.3% in July 2024, and the underemployment rate jumped to 7.8%. Hiring has plummeted, with the lowest numbers since 2017, and the quits rate has fallen to its lowest level since 2017 as well. All of this paints a picture of a weakening economy that voters are likely to feel come November.

Here’s the scary chart from 2008 when things really got out of control:

Here’s the picture of where we are now - and with the revisions made this week to the economy - the picture is even worse:

Consumer spending is also showing signs of stress. McDonald’s just reported its first negative same-store sales since 2020, and Home Depot saw a 3% drop in comparable store sales in Q2 2024. Even luxury brands like LVMH are seeing weaker sales in the U.S. and China. This downturn in consumer demand is something to keep an eye on, as it will likely play a significant role in how voters perceive the state of the economy.

McDonald’s just reported its first negative same-store sales since 2020

Upcoming Job Reports: Key Dates

Now, let’s talk about the upcoming job reports. These are going to be crucial in shaping voter sentiment as we approach Election Day. There are three major reports still to come: September 6, October 4, and November 1. The October report is particularly important because it drops on the Friday before the election, and I predict it will be a doozy. It could very well set the tone for the final days of the campaign, and if it shows continued weakness in the labor market, it could spell trouble for Harris.

While some in our camp are panicking, the reality is that Harris’s polling lead is far from insurmountable, and the economy is on shaky ground. We need to stay focused on the data, not the media’s narrative. The upcoming job reports will be critical, and if the economy continues to show signs of weakness, it could shift the momentum in our favor.

Let’s break it down with some key stats:

• Unemployment is rising, with July 2024 showing a 4.3% rate, while the underemployment rate jumped to 7.8%.

• Hiring has plummeted to its lowest levels since 2017, with population-adjusted hiring rates at just 1.99% in June 2024.

• Consumer spending is faltering, as evidenced by McDonald’s first negative same-store sales since 2020, Home Depot’s 3% drop in comparable store sales, and luxury brands like LVMH reporting weaker sales.

These figures tell a story of an economy that voters will feel in their daily lives as we head toward November. Let’s stay calm, stay focused, and keep pushing forward. The data is on our side.

Stay tuned for Part 2, where we’ll dive deeper into how corporate America’s struggles are a clear signal that the economic situation will play a pivotal role in the final weeks of the campaign.