WASHINGTON (AP) — A key question is looming for Vice President Kamala Harris as she edges closer to gaining the Democratic presidential nomination: Can she turn the Biden-Harris economic record into a political advantage in a way that President Joe Biden failed to do?
In some ways, her task would seem straightforward: The administration oversaw a vigorous rebound from the pandemic recession, one that shrank the U.S. unemployment rate to a half-century low of 3.4% in early 2023 — far below the painful 6.4% rate when Biden and Harris took office in 2021. The rate stayed below 4% for more than two years, the longest such stretch since the 1960s.
Boosted by the administration's $1.9 trillion stimulus package, robust economic growth sent demand for workers soaring, forcing employers to jack up wages. Paychecks rose particularly fast for lower-paid workers, thereby narrowing income inequality.
Soon, though, clogged supply chains caused parts shortages, as demand for furniture, cars, and other goods, juiced by the administration's stimulus, soared. Russia's invasion of Ukraine escalated gas and food prices. In June 2022, inflation reached a four-decade high.
The spike in prices was so severe that it offset most of the wage growth that workers had enjoyed. And it soured Americans on the economy. Consumer sentiment plunged in late 2021 and has barely recovered even as inflation has plummeted from 9.1% in 2022 to 3%.
A wide gap has opened up between the public's dim view of the economy and the generally positive data on jobs, falling inflation and economic growth. Chris Jackson, head of polling at Ipsos Public Affairs, said he blames the cumulative jump in average prices over the past three years — roughly 20%, only partly offset by higher paychecks — and a general unease about the country's direction.
“People are, generally speaking, doing OK,” Jackson said. “They have their jobs, they’re getting paid, they’ve seen pay raises — all those sort of things. And yet they don’t feel like their dollars go as far. They feel like the country is not going in a good direction, just in general.”
Former President Donald Trump is campaigning hard on the higher cost of living, having mentioned inflation 14 times in his speech last week at the Republican National Convention. His running mate, Sen. JD Vance of Ohio, has attacked Biden over the surge in housing costs, which has diminished the hopes of many would-be home buyers.
Speaking this week in Indianapolis, Harris highlighted her support for “affordable health care" and “affordable child care.” She also charged that Trump would eliminate the Biden administration's price cap on insulin, which the White House often cites as an example of its efforts to reduce high drug costs.
Even though inflation — the rate of price increases — has sharply slowed over the past two years, Americans remain unhappy that average prices are much higher than they were just a few years ago. Grocery prices are up 21% since Biden and Harris took office. Average apartment rents have climbed about 23%, to $1,411 a month, according to Apartment List.
And to fight inflation, the Federal Reserve, led by Chair Jerome Powell, raised its key interest rate at the fastest pace in four decades. Borrowing costs soared as a result. The average 30-year fixed mortgage rate has more than doubled, from a low of about 2.7% during the pandemic to about 6.8% last week.
The combined increase in prices and inflation has been particularly jarring for many families because it followed nearly a decade of little-to-no inflation and ultra-low interest rates. America's households grew used to prices barely rising. From 2015 until the pandemic, for example, U.S. food prices were basically flat. When high inflation eventually did strike, it both bruised Americans' finances and darkened their economic outlook.
Still, many leading policymakers see the Fed's sharp boost in interest rates, and the subsequent fall in inflation, as an economic success story. When the Fed began aggressively raising rates, making consumer and business loans much costlier, the widespread fear was that the United States would soon tumble into a recession. In August 2022, Powell issued a high-profile warning that the Fed's inflation fight would “bring some pain to households and businesses.”
Instead, inflation has fallen without a sharp rise in unemployment, which is at a still-low 4.1%. And Fed officials have indicated that they're increasingly confident that inflation is declining steadily toward their 2% target.
Christopher Waller, an influential member of the Fed's governing board, celebrated that progress in remarks last week.
“We’ve never really seen this in terms of a severe policy tightening,” Waller said, referring to the Fed's rate hikes. “The economy just kind of held its ground. And inflation came down a lot. This has been an amazing recovery from what happened in ‘21 and ’22.”
Yet many everyday Americans aren't sharing in the enthusiasm as they grapple with still-high costs. New car prices, for example, jumped 24% in the three years after the pandemic, to an average of $48,000. They have largely leveled off in the past year, according to government data. But on Thursday, General Motors said that customers paid an average of nearly $50,000 for one of its new cars in the April to June quarter.
Perhaps most painfully, housing affordability has worsened. Both prices and mortgage rates are much higher than they were three years ago. The monthly payment for a newly purchased median-priced home has jumped nearly one-third in that time, to more than $3,000, according to Harvard's Joint Center for Housing Studies. Would-be homebuyers need to earn at least $100,000 to afford the median-priced home in nearly half of all metro areas, the center has found.
Abigail Wozniak, director of the Opportunity and Growth Institute at the Federal Reserve Bank of Minneapolis, said the burden of such major purchases becomes harder to manage when overall prices spike.
“It’s difficult to change your consumption" of cars and homes "in little amounts quickly,” Wozniak said. "You’re forced to think about this big budget choice of, should I give up a car and substitute into transit? That’s a huge adjustment. And adjustments are painful.”
Then there are groceries. A pound of ground beef has jumped $1.05 since Biden’s inauguration, to a national average of $5.36 a pound, according to government data. Though egg prices are far below the peak they reached during a bout of avian flu in late 2022, at $2.72 a dozen they're still 85% more expensive than they were three years ago. A pound of chicken has surged 25% to $2.01 since January 2021.
Economists at the Biden administration have calculated, though, that average wages have risen enough to make up for the higher costs. As of June, average hourly pay was 23% higher than it was four years earlier — larger than the 21% jump in average prices. As a result, the White House economists calculated, it now takes about 3.6 hours of work for a typical employee to buy a week’s worth of groceries, about the same as it did before the pandemic.
Economists say this is how it's supposed to work: After an inflationary burst, prices won’t fall back to their previous levels. Such sustained price drops typically occur only during recessions. In a healthy economy, wages eventually rise enough for consumers to afford the higher costs.
By some measures, lower-income workers have fared particularly well, a result of the difficulty employers faced after the pandemic in filling many in-person jobs. Wages for restaurant and hotel workers soared nearly 15% in the spring of 2022 from a year earlier — much faster than the inflation rate.
Yet overall household income hasn't grown as fast as hourly pay. That can happen if fewer people in a household work or if their hours are cut.
Economists at Motio Research have calculated that since Biden was inaugurated in January 2021, inflation-adjusted median household incomes have risen just 1.6% to $79,000. (The median represents a midpoint and filters out extremely high or low numbers that can skew averages.)
“So if half of the population, at least, see their income stagnating for four years, you can understand why inflation is being identified as a huge problem here,” said Matias Scaglione, a co-founder of Motio.
FILE - President Joe Biden and Vice President Kamala Harris stand on stage at the Democratic National Committee winter meeting, Feb. 3, 2023, in Philadelphia. (AP Photo/Patrick Semansky, File)
Houthi rebels in Yemen say Israeli airstrikes on Thursday targeted the rebel-held capital of Sanaa and the port city of Hodeida. The Israeli military said it attacked infrastructure used by the Houthis at the international airport in Sanaa, power stations and ports.
The strikes on Thursday follow several days of Houthi launches setting off sirens in Israel, and last week, Israeli jets bombed Sanaa and Hodeida, killing nine people. The Houthis have also been targeting shipping in the Red Sea corridor, calling it solidarity with Palestinians in Gaza.
In the Gaza Strip, an Israeli strike killed five Palestinian journalists in a van with press markings outside a hospital in a refugee camp, the Health Ministry said Thursday. Israel's military said it targeted a group of militants allied with Hamas, which ignited the war with its Oct. 7, 2023, attack in southern Israel.
Israel's bombardment and ground invasion in Gaza has killed over 45,000 Palestinians, more than half of them women and children, according to Gaza’s Health Ministry, which does not distinguish between fighters and civilians in its count.
Hamas’s attack on southern Israel in October 2023 resulted in the deaths of about 1,200 people, while 250 others were taken hostage by Palestinian militants. Around 100 hostages are still being held in Gaza, although only two-thirds are believed to still be alive.
Here’s the latest:
JERUSALEM — Houthi rebels in Yemen said Israeli airstrikes on Thursday targeted the rebel-held capital of Sanaa and the port city of Hodeida, following several days of Houthi launches that set off air-raid sirens in Israel.
The Israeli military said it attacked infrastructure used by the Houthis at the international airport in Sanaa and ports at Hodeida, Al-Salif and Ras Qantib along with power stations. Israeli Prime Minister Benjamin Netanyahu said in a speech on Wednesday that “the Houthis, too, will learn what Hamas and Hezbollah and Assad’s regime and others learned.”
The Iran-backed Houthis’ media outlet reported the strikes in a Telegram post, but gave no immediate details. The U.S. military also has targeted the Houthis in Yemen in recent days. The United Nations has noted that the ports are important entryways for humanitarian aid.
Over the weekend, 16 people were wounded when a Houthi missile hit a playground in Tel Aviv.
Last week, Israeli jets struck Sanaa and Hodeida, killing nine people, calling it a response to previous Houthi attacks. The Houthis also have been targeting shipping on the Red Sea corridor, calling it solidarity with Palestinians in Gaza.
QAMISHLI, Syria — Thousands of people in northeastern Syria attended a funeral Thursday for six fighters from a Kurdish-led, U.S.-backed force who were killed in ongoing clashes with Turkish-backed militias.
The Turkish-backed groups are launching attacks to take the Arab cities west of the Euphrates River that are under the control of the Kurdish group . The Turkish-supported groups helped overthrow Bashar al-Assad’s rule of Syria, and have since kept pushing eastward against the Kurdish groups.
“We thought that Syria today has entered a new stage after the fall and escape of Assad. We thought that we got rid of all of this, but this attack on us changed everything and those who came in are taking orders from Turkey,” said Nihayet Hassan, the uncle of a killed fighter.
The fighters were killed during attacks on Tishreen Dam near the strategic city of Manbij in recent days. The bodies were returned to the city of Qamishli in northeastern Syria where the U.S.-backed group, known as the Syrian Democratic Forces, has a strong presence.
Ankara sees the SDF as an affiliate of its sworn enemy, the Kurdistan Workers’ Party, which Turkey classifies as a terrorist organization. Turkish-backed armed groups backed by Turkish jets have for years attacked positions where the SDF are present across northern Syria, in a bid to create a buffer zone free from the group along the Turkish border.
“It is obvious that Turkey’s issue is with the Kurds. It is not about an organization, or the PKK, no, their target are the Kurds,” said Ahmad Ammo, a Qamishli resident who attended the funeral.
The U.S. has about 2,000 soldiers in eastern Syria to help fight the Islamic State group and protect critical oil fields there.
BEIRUT — The Lebanese military said Thursday that Israeli troops encroached on areas of southern Lebanon, violating a ceasefire agreement that ended the war between Israel and the Hezbollah group.
The U.S.-brokered ceasefire that went into effect a month ago called for Hezbollah militants and Israeli troops to leave southern Lebanon over a 60-day period as Lebanese army soldiers gradually deploy in the country south of the Litani River. The Israeli military did not immediately comment on the reported incident.
Meanwhile, Lebanon’s state-run National News Agency said Israeli bulldozers are setting up dirt barricades that would close off the road between Wadi Slouqi and Wadi Hujeir.
Lebanon’s military said it brought reinforcements into the areas entered by Israeli troops. NNA said the United Nations peacekeeping mission in Lebanon, known as UNIFIL, sent a patrol unit to an area near the southern town of Qantara where Israeli forces are present.
UNIFIL in a statement expressed its “concern at continuing destruction by the IDF (Israeli military) in residential areas, agricultural land, and road networks in south Lebanon.”
Lebanese army chief Gen. Joseph Aoun traveled to Saudi Arabia earlier Thursday as part of ongoing efforts by the cash-strapped military to find financial support to deploy in larger numbers.
The Lebanese military and government have complained about Israeli strikes and overflights in the country to a new monitoring committee headed by the U.S. that also includes France.
DEIR AL-BALAH, Gaza Strip — An Israeli strike killed five Palestinian journalists outside a hospital in the Gaza Strip overnight, the Health Ministry said Thursday. The Israeli military said it had targeted a group of militants.
The strike hit a car outside the Al-Awda Hospital in the built-up Nuseirat refugee camp in the central part of the territory. The journalists were working for the local Quds News Network.
The military said it targeted a group of fighters from Islamic Jihad, a militant group allied with Hamas, whose Oct. 7, 2023, attack into southern Israel ignited the war. Associated Press video showed the incinerated shell of a van, with press markings still visible on the back doors.
The Committee to Protect Journalists says over 130 Palestinian reporters have been killed since the start of the war. Israel has not allowed foreign reporters to enter Gaza except on military embeds.
BEIJING — China has pledged two more shipments of humanitarian aid to Gaza, in an indication of support for the Palestinian Authority, state media reported Thursday. The agreement was overseen in Cairo by Chinese Ambassador to Egypt Liao Liqiang and Palestinian Ambassador to Egypt Diab al-Louh.
“To ease the humanitarian conditions in the Gaza Strip, the Chinese government has continued to provide assistance to Palestine,” Liao was quoted as saying. The types and quantities of aid to be delivered via Egypt were not given, but China has previously shipped food and medicine to Gaza. China has longstanding ties with the Palestinian Authority but has also sought to strengthen economic and political relations with Israel.
Al-Louh “voiced appreciation for China’s consistent and firm support for the just cause of the Palestinian people and for raising this issue on international occasions," state media said.
UNITED NATIONS — The U.N. Security Council will hold an emergency meeting on Monday at Israel’s request to discuss recent attacks by Yemen’s Houthi rebels.
Israel’s U.N. Mission said Wednesday the meeting will take place at 10 a.m. Monday.
Israeli U.N. Ambassador Danny Danon said he expects the council will condemn the Houthi attacks.
He urged the council “to enforce international law and hold Iran, the Houthis’ patron, accountable.”
Alluding to Israeli retaliation for the attacks, Danon said ”It seems that the Houthis have not yet understood what happens to those who try to harm the state of Israel.”
A mourner cries while she takes the last look at the body of a relative, one of eight Palestinians killed, during their funeral following the withdrawal of the Israeli army, in the West Bank city of Tulkarem, Thursday, Dec. 26, 2024. (AP Photo/Matias Delacroix)
Locals stand next to a damaged building after the latest Israeli military operation, in the West Bank city of Tulkarem, Thursday, Dec. 26, 2024. (AP Photo/Matias Delacroix)
Syrian fighters travel on vehicles, as they patrol at a highway, in Damascus, Syria, Thursday, Dec. 26, 2024. (AP Photo/Hussein Malla)
Security forces of the newly formed Syrian government patrol in downtown Homs, Syria, Thursday, Dec. 26, 2024. (AP Photo/Leo Correa)
The coffins of two of six Kurdish fighters from the Syrian Democratic Forces (SDF) killed in ongoing clashes with Turkish-backed militias in northern Syria are carried during their funeral in Qamishli, northeastern Syria, Thursday, Dec. 26, 2024. (AP Photo/Hogir El Abdo)
A mourner cries after taking a last look at the body of a relative, one of eight Palestinians killed, during their funeral following the withdrawal of the Israeli army, in the West Bank city of Tulkarem, Thursday, Dec. 26, 2024. (AP Photo/Matias Delacroix)
Locals stand next to a damaged building after the latest Israeli military operation, in the West Bank city of Tulkarem, Thursday, Dec. 26, 2024. (AP Photo/Matias Delacroix)
A mourner cries while she takes the last look at the body of a relative, one of eight Palestinians killed, during their funeral following the withdrawal of the Israeli army, in the West Bank city of Tulkarem, Thursday, Dec. 26, 2024. (AP Photo/Matias Delacroix)
Mourners carry the bodies of killed Palestinians, some wrapped with the Islamic Jihad flag, during their funeral following the withdrawal of the Israeli army, in the West Bank city of Tulkarem, Thursday, Dec. 26, 2024. (AP Photo/Nasser Nasser)
A mourner cries after taking the last look at the body of a relative, one of eight Palestinians killed, during their funeral following the withdrawal of the Israeli army, in the West Bank city of Tulkarem, Thursday, Dec. 26, 2024. (AP Photo/Matias Delacroix)
Mourners react as they carry the bodies of five Palestinian journalists who were killed by an Israeli airstrike in Gaza City at the Al-Aqsa Hospital in Deir al-Balah, Thursday, Dec. 26, 2024. (AP Photo/Abdel Kareem Hana)
A relative mourns over the body of one of the five Palestinian journalists who were killed by an Israeli airstrike in Gaza City at the Al-Aqsa Hospital in Deir al-Balah, Thursday, Dec. 26, 2024. (AP Photo/Abdel Kareem Hana)
Palestinians, mostly journalists, gather around the bodies of five Palestinian journalists who were killed by an Israeli airstrike in Gaza City, at the Al-Aqsa Hospital in Deir al-Balah, Thursday, Dec. 26, 2024. (AP Photo/Abdel Kareem Hana)
A woman reacts during the funeral of five Palestinian journalists who were killed by an Israeli airstrike in Gaza City at the Al-Aqsa Hospital in Deir al-Balah, Thursday, Dec. 26, 2024. (AP Photo/Abdel Kareem Hana)
Relatives and friends mourn over the bodies of five Palestinian journalists who were killed by an Israeli airstrike in Gaza City at the Al-Aqsa Hospital in Deir al-Balah, Thursday, Dec. 26, 2024. (AP Photo/Abdel Kareem Hana)
