AXA IM: A risk to Harris’ candidacy lies in deterioration US economy

5 augustus 2024

Verenigde Staten Politiek

Amerikaanse verkiezingen VS (Sinisa Maric, Pixabay).jpg

Due to her connection with Joe Biden, a further increase in unemployment between now and November would probably hinder Harris' chances.

Indeed, the 'Trump trade' – consistent with a stronger dollar and higher long-term interest rates – is fading somewhat as Kamala Harris has managed to plug the gap with her Republican opponent. According to the 538 polling average, the Vice-President is now leading by 1.6ppt.

It seems that, for now, Donald Trump – weighed down by a Vice-President candidate who is proving more controversial than expected – is finding it difficult to find the right angle against Harris. The Democrats’ convention starting on 19 August will probably prolong Harris’ surge in public awareness.

'It is still early days though, and a risk to Harris’ candidacy lies in the deterioration of the US economy,' says Gilles Moëc, AXA Group Chief Economist and Head of AXA IM Research, in his latest Macrocast.

'Most predictive models of US presidential elections suggest that voters make up their mind quite early about the state of economy. A few months ago, we showed that consumer confidence in the first quarter of an electoral year has a strong impact on the chances of success of an incumbent President. Yet, since Harris cannot completely distance herself from the Biden’s administration’s management of the economy, a further increase in unemployment between now and November would probably hinder her chances, Moëc says.

'It would also make Trump’s platform more attractive to electors. Indeed, while his tax cut agenda looked difficult to defend in the context of a still robust US economy, it would be much easier to communicate against a background of weaker economic prospects,' he adds.