As the United States approaches the 2024 presidential election, the economy remains at the center of public debate. Inflation, interest rates, jobs, and consumer confidence all play key roles not only in shaping voters’ opinions but also in determining how Americans feel about their personal financial situation.
With the vote just around the corner, it’s worth asking: what should we expect from the U.S. economy before election day? Will growth hold steady, or will uncertainty cause a slowdown?
Here’s a closer look at the main forces shaping the economy in the months leading up to the election — and how they could affect households, businesses, and investors alike.
1. The Economy’s Balancing Act
The U.S. economy has shown remarkable resilience since the pandemic. Even after years of inflation and aggressive interest rate hikes by the Federal Reserve, growth has continued, and unemployment remains near historic lows.
However, that resilience has come with a price. Many households are still feeling squeezed by high costs for housing, food, and energy. Credit card balances are at record highs, and consumer savings have dropped sharply from their pandemic-era peaks.
Before the elections, the economy is expected to enter a period of cautious stability — not booming, but not collapsing either. Economists call it a “soft landing”: slower but steady growth, cooling inflation, and fewer price shocks.
2. Inflation: Cooling, But Not Gone
Inflation has eased from its 2022 highs, but it hasn’t fully disappeared. As of 2024, the annual inflation rate has hovered around 3%, slightly above the Federal Reserve’s 2% target.
Before the elections, inflation is likely to remain moderate — lower than the worst years of the pandemic recovery, but still noticeable in everyday prices. The biggest sources of inflationary pressure continue to be:
- Housing costs, as rents remain high in many cities.
- Services, including healthcare and insurance.
- Energy, depending on oil market volatility and geopolitical tensions.
For voters, that means the economy may “feel” mixed: the data may look strong, but the cost of living continues to test family budgets.
3. Interest Rates and the Federal Reserve’s Next Moves
The Federal Reserve plays a crucial role in this pre-election environment. After raising interest rates sharply from 2022 to 2023, the Fed has shifted to a more wait-and-see stance.
Markets are closely watching whether the central bank will cut rates in the months before the election. A rate cut could boost consumer confidence, make borrowing cheaper, and stimulate markets — but the Fed has emphasized that decisions are based on economic data, not politics.
If inflation keeps trending down, the Fed could deliver one or two modest cuts before election day. That would bring relief to borrowers — particularly homebuyers and small business owners — but the timing will depend on the data, not the political calendar.
4. The Labor Market: Still Strong, But Slowing
One of the bright spots of the post-pandemic recovery has been the robust job market. The U.S. has added millions of jobs, and unemployment remains around 4%. Wages have also grown faster than inflation for much of 2024.
That said, there are early signs of cooling: hiring has slowed in some industries, job openings are down, and layoffs have risen slightly in the tech and manufacturing sectors.
Before the elections, the labor market is expected to stay solid but lose some momentum. The key question will be whether slower hiring feels like “normalization” — or like the start of a downturn.
For most voters, job security and wage growth will heavily influence how they perceive the economy.
5. Consumer Confidence and Spending
Consumer spending — which makes up about 70% of U.S. GDP — remains the heartbeat of the economy. Despite higher borrowing costs, Americans have kept spending, supported by rising wages and a still-strong job market.
However, there are cracks beneath the surface. Credit card debt and delinquencies are increasing, and many households are relying on credit to maintain their lifestyles.
Heading into the elections, analysts expect spending to remain steady but cautious. Consumers are still shopping, traveling, and dining out — but they’re becoming more selective, cutting back on big-ticket items and non-essential purchases.
6. The Stock Market: Volatile but Optimistic
Wall Street has often rallied in election years, and 2024 has been no exception so far. The stock market’s performance has reflected optimism about cooling inflation and the possibility of rate cuts.
Still, volatility tends to increase before elections, as investors weigh the potential policy shifts depending on who wins. Historically, markets prefer clarity — so any uncertainty about fiscal policy, trade, or taxes could cause short-term swings.
Long-term investors, however, usually fare fine: markets tend to rise regardless of which party wins, as underlying economic fundamentals matter more than political cycles.
7. Business Investment and Housing
Corporate investment has slowed somewhat as companies wait to see how the election outcome might affect taxes, regulations, and trade policies. However, sectors tied to technology, clean energy, and infrastructure continue to attract strong investment thanks to ongoing government programs.
The housing market, meanwhile, remains challenging. High mortgage rates have cooled sales but also limited inventory, keeping home prices elevated. If the Fed eases rates before the elections, housing could see a brief rebound in activity.
8. The Bottom Line: Stability With a Side of Uncertainty
As the U.S. heads toward the elections, the overall economic outlook remains cautiously optimistic. Growth is slowing but not stalling; inflation is easing but still sticky; and the labor market, while cooling, continues to support strong household income.
The biggest wild cards will be inflation data, global events, and how the Federal Reserve responds.
For most Americans, that means an economy that feels “okay but uncertain” — one that’s not in crisis, but not yet comfortable either.
Whether that sentiment helps or hurts the incumbent administration will depend not just on numbers, but on how voters interpret their own financial realities in the months leading up to election day.