The U.S. economy is riding a high wave just days before the November 5 election, with inflation cooling, job growth strong, and home sales on the rise.
Americans are spending again, and consumer confidence is at levels not seen since the early days of the pandemic. But the strong economy isn’t just a comfort blanket.
Whoever wins the presidency will face sky-high expectations to maintain this momentum without triggering another financial crisis. And, yes, the markets are feeling the pressure too.
Since Joe Biden took office, the S&P 500 has surged over 50%, including a 24% climb this year alone. This economic boom is fueling fierce debates between Kamala Harris and former President Donald Trump as they pitch themselves as the best leaders to steer the future of U.S. growth. The public is skeptical.
An October YouGov poll showed 44% of U.S. adults believe a “total economic collapse” is at least somewhat likely. This is where the race gets serious. Americans want economic stability and want it now, and both candidates have their work cut out for them if they want to win over the wary voter.
Harris and Trump’s economic visions
Harris and Trump, both determined to secure the presidency, have contrasting economic blueprints. Trump leans into America-first policies. He wants tariffs on all imports, deeper corporate tax cuts, and an immigration crackdown.
Economists, however, are waving red flags on these policies. Trump’s proposed universal tariffs, which he claims will be paid by “foreign countries,” would actually fall on American consumers and importers, driving up prices on goods nationwide.
Even Howard Lutnick, Trump’s own transition co-chair, admitted on CNBC that tariffs would mean higher costs for Americans.
Trump’s tariff ideas aren’t just small fees. At various points, he’s proposed slapping a 10% to 60% tariff on all imports, with special punishment for Chinese goods. Given the U.S. imported over $3 trillion in goods last year, a 10% or 20% rate could add hundreds of billions in costs for American consumers.
The Yale Budget Lab estimates Trump’s plan would hit U.S. households with an additional $1,900 to $7,600 per year in expenses. And that’s only if other nations don’t retaliate. A global trade war could wreck U.S. exports, driving job losses across sectors.
Harris has her own slate of proposals. She wants to raise corporate taxes, put a cap on price hikes for groceries, and offer subsidies and tax credits for housing, child care, and other essentials. Harris’s ideas have caught heat from economists and corporate leaders alike.
They argue that banning “price gouging” in the grocery sector could lead to unintended costs that, in the end, consumers might end up paying anyway. Critics say her corporate tax hikes could stifle business growth, but Harris believes these policies will benefit working Americans.
The strong economy is giving Harris and Trump a platform for action that neither Biden nor Obama had at the start of their terms. Justin Wolfers, a professor at the University of Michigan, puts it bluntly: “If you’re in a recession, you’ve got one job: Fix the recession.
But if the economy’s solid, candidates like Trump and Harris have room to pursue their own agendas.” For Harris, that means taxing the wealthy to support the middle and working class, while Trump is leaning hard into policies aimed at big business.
The dollar and market jitters
The economy isn’t the only hot topic. The U.S. dollar just posted its biggest monthly gain in over two years, boosted by strong economic data and speculation about a Trump victory. A dollar index measuring the greenback against six major currencies jumped 3.2% in October.
Strong payroll data from September, higher consumer spending, and a rosy economic outlook have helped fuel the dollar’s rise.
“It’s been the perfect storm of dollar-supportive information over the last few weeks,” says Eric Winograd, chief economist at AllianceBernstein. Investors are betting on the dollar, driven by the belief that a Trump win could mean higher interest rates for longer.
With the race between Harris and Trump tight, polls showing a near 50/50 split have only heightened the tension. If Trump wins, his tariffs and tax cuts could apply pressure on inflation, likely keeping the Federal Reserve from cutting rates too quickly.
“It’s a combination of better than expected economic data, and also the growing consensus that Trump is likely to win,” says economist Andrzej Skiba. “With Trump, you could expect greater pressure on inflation.”
Trump has voiced support for a weaker dollar, but changing currency strength isn’t as easy as he suggests. After a 0.5 percentage point rate cut in September, futures markets now expect a smaller 0.25-point cut at the next Federal Reserve meeting.
October’s payrolls came in lower than forecast, though hurricanes and strikes distorted the numbers. Unemployment held steady, but investors see another cut in December as a real possibility.
Mark McCormick isn’t betting on a major dollar dip if Harris wins, either. “But that’s a dip,” he says, not a crash. Economic resilience is keeping the dollar steady for now, regardless of which candidate wins. As Winograd of AllianceBernstein puts it, “I don’t think the dollar will undo an entire month’s worth of gains.”
To put Trump’s tariffs in perspective: If he went forward with a 10% or even 20% tariff on imports, American consumers would end up paying the price.
For context, Americans imported over $3 trillion in goods in 2023. A 10% tax on that means at least $300 billion in extra costs. And other countries wouldn’t just sit by—they’d hit back with tariffs on U.S. exports, pushing American-made goods out of foreign markets and costing jobs.
Trump’s economic agenda includes an aggressive immigration policy, too. His promise to deport immigrants on a mass scale would disrupt multiple sectors, from agriculture to tech.
All in all, this election brings a unique choice. With markets, currency, consumer confidence, and the entire global economy on the line, there’s no room for error.
