Economy, inflation and high grocery prices sank Democrat chances in 2024 election, says BC professor

BOSTON — It’s something the Harris campaign could just not get away from: higher prices for, it seems, just about everything.

And for voters, that was something even a technically thriving economy could not hide.

“I couldn’t be happier, very pleased,” said Trump supporter Cliff Keirstad, as he enjoyed breakfast at Wilson’s Diner in Waltham Wednesday. “The history of the last four years is basically the crux of the whole thing. I’m kind of tired of Bidenomics and losing money. Working day to day and trying to get by, I think that was the main thing.”

Part of the rise in prices over the last four years was connected to demand for consumer goods often outstripping supply in the aftermath of the pandemic. But Boston College Associate Finance Professor Darren Kisgen, PhD, said there was another factor, intimately linked to the White House.

“One of them is almost surely the amount of spending the federal government has done over the last three or four years,” he said. “I think when you pump that much money into an already recovering and growing economy, you’re bound to see inflation come up.”

Democrats might argue the inflation rate has come down. And they are correct, Kisgen said. But lest there be a misunderstanding: “The growth rate of inflation has come down, but that doesn’t mean prices have come down,” he said.

And that has meant, for many working class Americans, a weaker dollar. Kisgen suggested that in winning the Rust Belt, Trump once again tapped into a segment of the population seemingly left behind by the booming economy.

But that’s not the only thing the President-elect tapped into.

Hours after Trump was declared the winner in Wisconsin, thus clinching the presidency, the stock market soared to a record level of 43,499 -- a nearly 1,300 jump in the Dow.

Now why would that happen?

Kisgen said it’s simple: Trump has a history of delivering corporate tax cuts. In his first term, they went down about 40 percent. In a second term, Trump is promising a further drop from 21 to 15 percent. In contrast, Kisgen said, Kamala Harris proposed raising corporate taxes to 28 percent.

“If a company is paying less in corporate taxes, that’s more money that can go to shareholders, which means higher valuations for stocks,” he said. “Corporations will invest more. As they invest more, that means more jobs for more people.”

Consumers benefit, he added, because companies with lower taxes make more products -- and create more innovative products.

Democrats might say -- and have said -- that lower corporate taxes benefit the few at the expense of the many -- contributing to growing income disparity in America. Harris’s proposed hike in the corporate tax rate would, in theory, have helped alleviate that. But voters seemed focused on the out-of-sight grocery bills, the increasingly impossible dream of homeownership and wages that just can’t seem to keep up with the cost of living in the USA.

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