Election 2024: Inflation, rising interest rates and take home pay
10-year Treasury yield is hovering at 4.558%, highest since 2007
FreedomWorks chief economist Steve Moore breaks down the impact Bidenomics is having on middle-class Americans on 'The Bottom Line.'
Just as the seven Republican candidates prepare to take the stage Wednesday for a primary debate hosted by FOX Business, the stock market is winding down a rough September with inflation rising again and interest rates climbing. The double whammy is creating financial hardship for some consumers and potentially a big election issue.
"Historically, the biggest predictor of election outcomes is how much are consumers taking home, workers taking home, after they pay their taxes, after they pay for gas and food," said Jeffrey Buchbinder, LPL chief equity strategist. "High level, that’s it. That's the story. Inflation is obviously hitting harder right now than it has historically since probably the 1984 election," he added.
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Prices through the second quarter of this year have risen 15.8%, while wages have trailed, rising 12.8%, according to Bankrate and the Bureau of Labor Statistics.
While consumer inflation has abated, rising 3.7% in August, down from its peak of 9.1% in July 2022, select areas such as gas and fuel rose more than 10% month-over-month, with oil hovering around $90 per barrel.
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"The swing voter, they're falling behind inflation. It's that simple. That's what the numbers say. And then when you factor in that, some people are doing very good. The average person is worse off," Peter Morici, an economist and business professor emeritus at the University of Maryland, told FOX Business.
The 10-year Treasury yield hit 4.558% this week, a new 52-week high and the highest since October 2007, as tracked by Dow Jones Market Data Group. This has pressured stocks, which have sold off this month led by the Nasdaq Composite’s 6.9% drop.
The S&P 500 and Dow Jones Industrial Average are off 5.2% and 3.1%, respectively.
While September is historically the worst for equities, according to the Stock Trader’s Almanac, a catalyst for a rebound is not clear, according to Buchbinder.
"Rising interest rates are really starting to hamper the equity markets. When you get to higher levels of rates and higher levels of inflation, you can just see the call. The inverse correlation between stocks and bond yields get stronger" said Buchbinder, who is neutral on stocks for clients that are already fully invested.
Federal Reserve Chairman Jerome Powell speaks during a news conference after a Federal Open Market Committee meeting on Sept. 20, 2023, at the Federal Reserve in Washington, D.C. (Photo by Chip Somodevilla/Getty Images / Getty Images)
Earlier this month, Federal Reserve Chairman Jerome Powell signaled rates will likely stay higher for longer, creating more headwinds for investors and possibly voters.
HOW TO WATCH THE SECOND GOP DEBATE
The Ronald Reagan Presidential Library and Museum, in Simi Valley, California, is the site of the second Republican presidential nomination debate on Sept. 27, 2023. (Fox News/Paul Steinhauser / Fox News)
The second Republican debate will be broadcast live from the Ronald Reagan Presidential Library in Simi Valley, California, on FOX Business Network starting at 9 p.m. ET on Wednesday.
FOX Business' Megan Henney contributed to this report.