The economy, a key issue for voters as the November 5 presidential election draws nearer, will have a starring role in the debate tonight between the two candidates, Democratic nominee Kamala Harris and her Republican rival, former President Donald Trump. 

About 8 in 10 adults tell CBS News that the economy is a major factor in their choice at the polls, outpacing issues such as abortion and climate change. 

Each candidate will seek to convince voters that their proposals will lead to better economic conditions, ranging from bigger paychecks to lower inflation. And CBS News polling shows that Trump may have an edge with inflation-weary consumers, with about 4 in 10 voters saying prices are likely to go down if he wins — twice as many as those who believe the same would be the case with a Harris victory. 

“[I]nflation and the high cost of living are deeply impacting lower- and middle-income Americans,” said Liza Landsman, the CEO of Stash, a financial services firm that polled consumers ahead of the debate, in a statement. “What the study did shed sharper light on is how vastly different individuals’ perceive their economic condition depending on their political view.”

For instance, about 7 in 10 Trump supporters told Stash they are deeply concerned about inflation, compared with 2 in 10 Harris voters, the study found.

Economists largely rate the current economy as good, albeit with some weak spots, such as a slowing labor market. But about 42% of Americans incorrectly believe the U.S. is currently in a recession, down from about 48% last year, a new MassMutual survey found. 

“Sometimes it is difficult to separate out various doom-and-gloom factors when it is hitting your wallet directly,” Paul LaPiana, a certified financial planner and head of brand, product and affiliated distribution with MassMutual, told CBS MoneyWatch.

Even so, a number of Wall Street economists are predicting that Harris’ policies are likely to result in stronger economic growth for the U.S., while warning that Trump’s combination of tariffs and tax cuts could both spur inflation while causing the deficit to mushroom by trillions. 

Here’s what to know about three key economic issues that could influence voters. 

Inflation and grocery costs

Inflation has sapped household budgets since 2021, when prices started rising due to the impact of the pandemic, which disrupted global supply chains and prompted the federal government to pump trillions into the economy. (Both Presidents Trump and Biden signed large spending bills into law during the pandemic, authorizing stimulus payments and extra unemployment aid, among other supports).

To temper inflation, the Federal Reserve responded by hiking interest rates to their highest point in 23 years. That’s paying off, with government data on Wednesday expected to show that inflation cooled to 2.6% on an annual basis in August, its lowest since March 2021, according to financial data firm FactSet.

But lower inflation doesn’t mean that prices have come down; instead, it simply means that the rate of price hikes have moderated from their pandemic peak. 

The candidates are likely to discuss their plans to address inflation, which remains a key issue for voters given that grocery costs remain 21% higher than they were prior to the pandemic. That means a cart of groceries in 2020 that cost $150 would now set you back by $182, or $32 more at the register.

Harris has vowed to tackle grocery costs by enacting the first federal law against price gouging by food suppliers and retailers. But economists say they’re skeptical such a law could make much of an impact. 

Trump, meanwhile, has pledged to end the “inflation nightmare.” But his policies, which include adding tariffs to all imported goods, would likely fuel inflation and reverse some of the progress of the last two years, some economists say.

What the candidates are pledging on taxes 

Both Harris and Trump have already made some tax pledges, with Harris vowing to increase the corporate tax rate and Trump proposing a steep cut, taking it down to 15% from its current 21%. 

Trump also wants to extend his Tax Cuts and Jobs Act — his 2017 law that reduced tax rates for most individuals but provided the biggest benefits to the nation’s richest families. Many of those cuts are due to expire at the end of 2025. Trump’s vice presidential running mate, JD Vance, has also floated the idea of a bigger Child Tax Credit.

Harris, meanwhile, wants to enact more generous tax benefits, such as a $6,000 Child Tax Credit for parents of newborns and a bigger Earned Income Tax Credit. One analysis from the nonpartisan Penn Wharton Budget Model found that her proposals would help more low- and middle-income families than Trump’s.

“If Democrats sweep, personal and corporate taxes and benefit spending will likely rise,” Goldman Sachs analysts said in September 3 research report. “If Republicans sweep, they will likely stay mostly unchanged.”

Housing and the American Dream 

Housing remains out of reach for millions of Americans who are now priced out of home-buying due to high mortgage rates and housing prices. 

Harris has proposed providing $25,000 in down payment assistance for Americans who have paid their rent on time for two years, with more support for first-generation homeowners. She’s also proposing tax incentives for builders of starter homes, with the goal of widening the housing supply and lowering home prices.

Trump, meanwhile, has proposed making federal land available to help with housing supply, but his campaign hasn’t offered any details. He’s also vowed to deport between 15 million to 20 million undocumented workers, which he’s blamed for increasing housing demand and pushing up prices.

But the surge in home prices preceded the recent jump in undocumented workers, the New York Times reported. And deporting so many workers, many of whom work in construction, could jeopardize the workforce that builds homes. 

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The debate was heavily focused on US domestic matters—even when questions were on international affairs, both candidates sought to bring the issues back to domestic politics and policies.  

Of most relevance to Australia was the lack of interest in this region. Other than passing references—in heavily political contexts—neither the media nor the candidates raised China in any meaningful way. Notwithstanding the conflicts in Europe and the Middle East, China is the most significant issue globally. 

Without China being prioritised by the two candidates or media today, we can only hope that the next administration will be struck by the realities of Beijing as the pacing military and technological threat to our livelihoods and way of life. Australia and partners like Japan, the Quad and NATO, will need to work together to ensure the next administration is focused on competing with and countering China, and does so by viewing China as a strategic rival first and not as an economic partner. 

Given the next president will immediately face a world in conflict, a further debate that is limited to foreign policy and held before the November election would be best for both US voters and America’s partners. 

On China—Bethany Allen, head of program for China investigations and analysis, and Daria Impiombato, analyst 

While the moderators never asked about China, the topic came up unprompted within the first few minutes of the debate with Harris accusing Trump of inviting ‘trade wars’ but then adding the former President ‘sold us out’ to China. In a sense this focus was not surprising because the Trump administration’s tough turn on China was one of the most significant and controversial foreign policy shifts of his term. The Biden-Harris administration has also made competition with Beijing a key platform. 

More surprising was that, other than brief references, the issue of how to manage China strategically and in the context of potential flashpoints such a Taiwan and the South China Sea did not come up at all. 

Harris and Trump went on to spar over tariffs, microchips and the pandemic response, with Harris accusing the Trump administration of allowing the sale of chips to China that served to modernise the People’s Liberation Army. Trump’s retort that the US ‘barely make any chips anymore’ and that it is Taiwan instead that’s selling them to China again demonstrated the economic lens with which he views these issues.  

This is in line with his latest stances on Taiwan, as he has repeatedly stated that the island should pay the US to defend it, and that they have ‘stolen’ the chip manufacturing business from American companies. Harris, instead, opted to focus on the CHIPS Act and her intention to win the competition with China especially on technology and artificial intelligence. 

On Alliances—Eric Lies, analyst 

What stood out, in particular for US allies the world over, was Trump’s refusal to answer the question as to whether he believes Ukraine should win in the war against Russia. Instead, he repeatedly stated that he would end the war as president-elect. A key element of deterrence is convincing potential adversaries that if they choose violence, they will be met with resolve. Responses like Trump’s, which put Ukraine and Russia on a false equivalence, corrode that confidence in US security promises and will likely make allies in the Indo-Pacific nervous, while emboldening China’s revanchist activities. 

In contrast, Harris unequivocally stated her support for allied efforts within Europe, and how she intends to continue those efforts should she be elected. It meant that a clear foreign policy difference came through between the two candidates—a more isolationist, transactional foreign policy on the one hand and an alliance-driven policy on the other.  

On Ukraine and China—Malcolm Davis, senior analyst 

On Ukraine, Harris clearly demonstrated that she understood the potential implications of a Russian victory in Ukraine. Noting that if such an outcome were realised, ‘Putin would have his eye on the rest of Europe’. This is an accurate interpretation of the stakes at play. In contrast, Trump failed to deliver a convincing response, simply saying ‘he’d get on the phone to Putin and Zelensky’. 

The risk is therefore that a second Trump Administration could reduce support for Ukraine and increase the likelihood of delivering Putin a decisive strategic victory. 

On China, both candidates avoided any real discussion of the defence and national security implications of a rising China. Instead, they focused on trade relations. Whichever candidate wins in November, however, there is a chance that they will be confronted with a major crisis with Beijing over Taiwan. This is an issue that is far more important to the United States than tariffs. 

Generally, the debate avoided any real discussion on critical and emerging technologies and the importance of maintaining US leadership. In fact, as the ASPI Critical Technology tracker shows, China now holds a dominance in high-impact research that was once held by the US. Both candidates should have dealt more with this important issue and will need to do so as president. 

On Disinformation and Migration—Mike Copage, head of the Climate and Security Policy Centre 

As the world grapples with the prospect of AI driving mis and dis-information in democracies, the debate highlighted how vulnerable American political discourse has become to the spread of disinformation without it. Pressed by moderators that there’s no evidence to back claims by vice-presidential candidate JD Vance that Haitian illegal immigrants are eating pets in Springfield, Ohio, Trump responded that he knew it was true because he heard it from ‘people on television’. While ridiculous at face value, the real and serious consequences of a former President and current candidate repeating clearly false, racist and anti-immigrant claims cannot be ignored. The violence perpetuated following the spread of anti-immigrant misinformation in the United Kingdom demonstrates how far that can lead without responsible leadership. 

On the Media and China—Greg Brown, senior analyst, Washington DC 

Harris had a solid showing defined by poise without policy articulation. Her supporters will feel emboldened by the strategy to distance herself from the present Administration—noting during the debate that she was neither Joe Biden nor Donald Trump. 

President Trump had a weaker night—notwithstanding his zingers like ‘wake the President (Biden) up at four o’clock in the afternoon’—and appeared rambling at times. He missed opportunities to attack Harris effectively. 

As usual, the debate moderators (in this case ABC News) and voters were the losers.   

The lone foreign policy issue mentioned with any repetition was migration though with a heavy domestic lens. And neither candidate provided any sense of the drivers of, let alone policy responses to, the weaponization of mass migration. The passing references by both candidates regarding Iran, Ukraine and Russia were pedestrian. 

China, the ​supposed pacing challenge and threat, received little attention. Nor did we have a discussion of the Pentagon’s budget priorities, tariffs as tools of economic warfare, how to revive the US defence industrial base, let alone to US interests across the Pacific. 

On Asia-Pacific—Raji Pillai Rajagopalan, resident senior fellow 

While understandably focused on domestic issues, it was still surprisingly how little interest there was on foreign policy in the presidential debate. Considering the growing chaos the next president will have to deal with, that was unfortunate. 

America’s China and Indo-Pacific policy was not mentioned, nor were any other aspects of foreign and security policy in any detail. We heard only some broad outlines to which we were already familiar, such as a Trump Administration that will be suspicious of its partners because of the worry that America is being exploited, that will be more open to deal-making with adversaries such as Russia, China and North Korea, irrespective of the character of their behaviour and that will potentially raise tariff barriers with wide-ranging economic effects globally. 

On the Democrat side, Vice President Harris reiterated she would strengthen partnerships and stand up to authoritarian leaders, which is a more positive starting point, but all said without much detail. 

From a foreign policy perspective, it was clearly not a substantive debate. Leaving out everything from narrow issues of nuances to nuclear policy to broad issues such as relative commitment to different theatres like Europe, Middle East and Indo-Pacific. 

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Democratic Vice President Kamala Harris and former Republican President Donald Trump traded blows in the first presidential debate of the 2024 race — clashing over issues including abortion, economy and foreign wars.

Fox News proposes second presidential debate

US news channel Fox Newssaid it proposed to hold a second presidential debate in October. 

The channel, which largely caters to a conservative viewership, said it had sent letters to the campaigns for both Democratic Vice President Kamala Harris and Republican rival Donald Trump, before Tuesday night’s debate. 

This invitation aside, Harris’ campaign has already offered a rematch while Trump did not commit to it. 

“The reason you do a second debate is if you lose, and they lost,” he told Fox News host Sean Hannity in the spin room after the first debate. “But I’ll think about it.”

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