The state of the U.S. economy significantly impacts the day-to-day purchases Americans make. In a recent visit to the George Floyd Memorial Site in the city of Minneapolis, a local journalist and podcaster, Demetrius Pendleton, took interest in sharing his reflections on Floyd’s gruesome murder, subsequent protest action and prosecution outcomes. These reflective statements were made as he referenced an image on display in his studios a few feet from the memorial site.
In sharing details regarding the timing of these events, he remarks, “And when we think about it, we know this didn’t happen six months ago. We know it didn’t happen one year or even two years ago. Because we can tell from the gas price, $1.89.”
In August 2024, the Bureau of Labour Statistics recorded the average gas price in the state of Minnesota at $3.40 per gallon. Pendleton’s reference to this price dates back to mid-2021, when “Black Lives Matter” protests were rife across the city and the nation.
Pendleton’s reference indicates that high inflation rates have impacted all Americans in terms of their daily purchases. Since 2021, inflation in the United States has been rising, reaching highs of 8% in 2022 on the back of supply chain constraints impacting input costs on imported and locally produced goods. In response, the U.S. Federal Reserve Bank also increased interest rates to a 24-year high – making borrowing its most expensive, before cutting interest rates by 50 points in its September 18, 2024, meeting. This interest rate cut was in response to cooling inflation pressures, as the last reading was recorded at 2.5%, the smallest increase seen in over a year.
An image of a local Minnesota gas station reflecting the price of various grades of fuel, as captured by WPI 2024 Fellow, Gugulethu Mfuphi.
This recent move is seen as a sign of confidence in the resilience of the U.S. economy despite old concerns of a potential recession. Chris Farrell, economics and personal finance expert for MPRNews, said this interest rate cut will provide a great sense of relief for potential buyers in the residential property sector.
“If you think about every generation has a major economic problem, this generation’s major economic problem is with the housing market,” he said. “There just simply is not enough housing in the U.S. for the demand and whether that’s rental or that’s ownership,” commented Farrell adding that the housing market would benefit in the long term from a continued cycle of rate cuts. They are, essentially, making credit repayments cheaper for American citizens. “Homes will be more affordable, but the problem is because the supply is so limited prices won’t go down by much,” added Farrell.
Housing prices in the U.S. have increased by 20% on average, with more significant increases in varying states. Hope remains that the year ahead will see a shift in the tide making housing more affordable.
As American citizens prepare to head to the polls this November for the presidential elections, they will also have to consider which of these candidates, Donald Trump of the Republican Party or Kamala Harris of the Democratic Party, have the policies that best meet their concerns.
Both appear to have different priorities for bringing about economic stability to the economy. .
According to Farrell, Trump appears to keep making promises to cut taxes for different groups. “So, if you’re on Social Security – he’s going to cut taxes, if you get tips, you’re not going to pay taxes. He just proposed if you’re working for an American company, you’re not going to pay taxes on your overtime earnings, so he’s also trying to go cut the corporate tax. That’s the one to probably take the most seriously.”
On Harris, Farrell adds: “There you have more of a perspective trying to help people buy a home for first-time home the child care tax.” These areas of support are listed alongside incentives to fund small businesses and managing the country’s debt.
The economic landscape of America as a powerhouse remains critical to these elections. While consumers may not be fully aware of the details of the economic data, they certainly understand and feel the impact of economic pressures on their pockets.
