Qamar Bashir
Former Press Secretary to the President
Former Press Minister to the Embassy of Pakistan to France
Former MD, SRBC, CEO, ATV
Being in the US and experiencing the pre-election excitement and frenzy is an incredible experience. Unlike in our country, where economic and business activities usually see an upward trend during the run-up to elections, the situation in the US is quite the opposite. In Michigan, particularly in Detroit—known as the “Motor City”—industrial and manufacturing activities have come to a standstill. Car manufacturers have paused their assembly lines, awaiting the outcome of the election, as automobile policies could drastically change. If Trump comes to power, combustion engine vehicles may be favored, whereas a Harris administration is more likely to support electric vehicle manufacturing.
This period is extremely challenging for the job market. Factories are shutting down, and even regular employees are being laid off, forcing them to look for odd jobs to make ends meet. I visited a Pakistani-owned Pak machine factory that specializes in manufacturing high-precision leads and pins for the high-tech automobile industry, employing around 30 to 50 highly skilled workers. Unfortunately, due to the election-induced slowdown, the factory has ceased operations, and employees have been laid off. The factory plans to resume operations only after the presidential election results are finalized and a clear automobile policy is announced. While this economic slowdown before elections is considered normal, it leaves employees with a bitter experience and uncertainty about their future.
Another interesting trend we’ve observed while living in Macomb County, about 30 miles from Detroit, the capital of Michigan, is that almost all households display placards on their lawns showing their support for either Trump or Harris. In our peaceful locality, every placard we saw during our morning and evening walks bore Trump’s name, with the slogan “Take Back America.”
Though Michigan is a swing state that can lean either way, its residents are primarily concerned about rising commodity prices, property price escalation, interest rate hikes, and mortgage challenges. These issues are symptomatic of increased government spending and excessive currency printing, which exceed the economy’s capacity and ultimately erode the value of wages and salaries. This trend seems typical of incumbent governments, whether in Pakistan or the US, as they often resort to spending sprees to expand their vote banks without considering the greater national interest or adopting a long-term vision.
These shortsighed and vested interest policies, lofty promises, coupled with a faltering American economy, may become Harris’s Achilles’ heel, just as Trump’s stance on the alienation of both legal and illegal immigrants could turn out to be his Achilles’ heel.
Due to imprudent policies and reckless spendings, in the mid-2023, the inflation rates peaked at around 5-6%, the highest in over a decade, leading to increased costs for everyday goods, groceries, and fuel. The interest rate will reach about 5.25% in 2023, up from near-zero levels primarily due to rising inflation leading to increase in borrowing costs for businesses and consumers, slowing down economic activity, particularly in sectors such as housing, where mortgage rates have jumped to over 7% for a 30-year fixed mortgage.
The real wages (adjusted for inflation) have not kept up with rising prices, effectively reducing purchasing power. This “wage erosion” means that despite higher paychecks, many workers feel poorer as their earnings fail to cover rising costs of living. According to a report by the Bureau of Economic Analysis, real wages for American workers fell by 2-3% on average in 2023, indicating that salary gains are being outpaced by inflation.
During the election year, the Biden-Harris administration has introduced stimulus packages and spending initiatives, such as the $1.9 trillion American Rescue Plan and the $1.2 trillion Infrastructure Investment and Jobs Act. While these measures were aimed at boosting recovery, they also contributed to higher national debt and increased money supply, further fueling inflation.
In Detroit’s automotive sector, uncertainty around the election and future policies—such as EV (Electric Vehicle) incentives versus traditional combustion engines—has led to a slowdown in investment and production. This hesitation affects job markets, with many businesses delaying hiring or even laying off workers until policy directions become clearer.
Due to inflation, rising interest rates, and uncertainty, economic growth has slowed down, with GDP growth rates for 2023 projected to be around 1-2%**, compared to the robust 5.7% in 2021. This deceleration reflects a combination of consumer uncertainty, reduced spending power, and a cautious business environment.
Despite a challenging economic and financial outlook, Kamala Harris has made several ambitious promises during her 2024 campaign that aim to support middle-class families, workers, and first-time homebuyers. She has emphasized her vision to grow the middle class by reforming permitting processes to accelerate building projects, eliminating college degree requirements for federal jobs, and increasing union apprenticeships. She planned to expand the Earned Income Tax Credit (EITC) for workers without children, lowering the eligible age to 19. She has proposed providing an average of $25,000 in down payment assistance to qualified first-time homebuyers over four years. These policy proposals would increase the primary deficit by $1.2 trillion over a 10-year period from 2025 to 2034, indicating significant fiscal impacts if implemented.
Economic experts and media personalities and recently conducted surveys and pools are terming economic policies of Kamala Harris as her achilles heel. Handli Polls suggest that many voters trust Donald Trump over Kamala Harris on economic issues, with an 11-point lead in favor of Trump, reflecting concerns about inflation, slow wage growth, and fears of a potential recession under the Biden-Harris administration. Trump’s “America First” policies, including deregulation and tax cuts, are seen by many as having contributed to a stronger pre-pandemic economy, which Harris has struggled to replicate or effectively counter..
Economists have criticized Harris’s proposals for federal price controls on food companies and landlords, citing failures of similar policies in the past, such as during the Nixon era. Such controls are seen as potentially driving investors away from building rental housing, which could exacerbate the housing crisis rather than solve it.
Harris’s proposal to expand the child tax credit to $3,600 per child and $6,000 for newborns is seen with concerns that such spending, along with other proposed initiatives, could further increase inflation and deepen the national debt without corresponding cuts in federal spending or tax increases.
The economy is emerging as a crucial factor in the 2024 election, with Trump’s approach focusing on tax cuts and deregulation, which has led to high voter confidence in his ability to handle economic issues. In contrast, Harris has been criticized for not presenting a clear plan to handle inflation, rising interest rates, and overall economic stability. Her perceived lack of effectiveness in addressing inflation, wage growth, and housing costs, as well as concerns about increased government spending without a concrete strategy for economic expansion is going to cost her dearly in the upcoming elections.
Comments are closed.