The US Economy Kamala Harris Inherited and How She Can Manage It

CNN’s Elisabeth Buchwald, Chris Isidore, Bryan Mena and Allison Morrow

(CNN) — President Joe Biden arrived at the White House in 2021 amid heightened chaos and uncertainty across the country grappling with the pandemic. Biden used his inaugural address to promote unity, hoping to create a nation that is “stronger, more prosperous, more ready for the future.”

But as Biden has acknowledged throughout his time in office, there is still much work to be done. That task may now fall to Vice President Kamala Harris, who will inherit Biden’s campaign promises to rebuild the middle class, invest in infrastructure, boost domestic manufacturing and lower health care costs.

Since Harris began her presidential campaign, there has been a lot of good news for the US economy.

Strong GDP data on Thursday — and the possibility that the U.S. will achieve the rare feat of lowering inflation without reversing the economy — give Harris another campaign point to play in her efforts to persuade Americans to give her the White House in November. And on Friday, the Federal Reserve’s preferred inflation gauge fell closer to the central bank’s 2% target — all but cementing a rate cut in September.

Harris will be able to count on Biden’s strong economy. But one of her biggest challenges is overcoming the negative feelings many Americans have about the economy, stemming from the sharply higher prices of everything from groceries to rent over the past four years. The question is whether those perceptions will improve now that Biden has dropped out of the race.

Here’s how the economy looks as the presidential race enters its final 100 days.

Inflation, Interest Rates and a Resilient Economy

When Biden took office, inflation was barely noticeable, with consumer prices rising 1.4% per year. That quickly took a turn for the worse.

By June 2021, Biden’s sixth month in office, inflation in the country had risen to more than 5%. A year later, after Russia invaded Ukraine, which sent energy prices soaring, inflation reached 9.1%, the highest level in more than 40 years. But much of that inflation was also the result of big spending under both the Trump and Biden administrations in the wake of the pandemic.

Inflation has cooled significantly since then, with prices falling for the first time since the pandemic began last month. But overall, Americans are paying 20% more for goods and services compared with January 2021, according to the Consumer Price Index.

After the Federal Reserve raised interest rates to a 23-year high to tamp down inflation, the economy — finally — slowed. But it didn’t slip into recession, which is one of the risks of the Fed raising rates so quickly. Gross domestic product, a measure of all the goods and services produced in an economy, was solid in the first half of the year. GDP grew at a solid annual rate of 2.8% from April through June, after adjusting for inflation and seasonal changes, according to Commerce Department data released Thursday.

A white-hot job market that’s started to cool down

In April 2020, as the U.S. economy came to a grinding halt due to the pandemic, the nation’s unemployment rate rose to nearly 15%, the highest level since 1948, when the Bureau of Labor Statistics began tracking it.

The unemployment rate had already fallen to 6.4% at the start of Biden’s term. But the continued strength of the labor market has defied expectations for much of his presidency. The rate stayed below 4% for more than two years, the longest such period since the 1960s. But it has since risen above 4% as cracks in the labor market begin to show.

Finally, the infrastructure law was passed

Biden’s bipartisan Infrastructure Investment and Jobs Act and Inflation Reduction Act have allocated more than $1.6 trillion to rebuild and modernize infrastructure, support clean energy investments and strengthen America’s manufacturing industry.

While the full effects of the sweeping legislation will take years, if not decades, to be seen — the process of financing, building and implementing it takes time — the U.S. economy has already felt some of its short-term effects, including a boom in industrial plants, electric vehicles and manufacturing jobs, and the launch of long-awaited city projects to replace bridges and lead pipes.

Increasing clean energy and oil production

Biden’s energy legacy has generally been about clean energy, not fossil fuels. His 2022 Inflation Reduction Act included more than $350 billion in support for electric vehicles, charging stations and similar items.

He was often seen as anti-oil, attacking oil companies for record gasoline prices following Russia’s invasion of Ukraine.

But the country’s oil production hit a record in 2023, with average daily production of 12.9 million barrels of oil. That’s more than any country has ever produced. So far, production in 2024 has increased by another 3%.

Friend of organized trade unions

Biden, described by the AFL-CIO as “the most pro-union president in our lifetime,” has often he was a good friend of organized trade unions.

His National Labor Relations Board has often sided with unions and workers. During the 2023 United Auto Workers strike, he became the first sitting president to join the picket line. Union membership and office holders have grown during his tenure, and unions won double-digit wage increases for nearly a million members last year.

But he and Congress also imposed unpopular contracts on freight-rail unions rather than let them strike. And even some union allies expressed concerns about his re-election bid.

Relief for consumers, families and seniors

From forgiving millions of student loans to cutting unnecessary fees, the Biden administration has focused on ways to save consumers billions of dollars a year.

That includes a campaign to eliminate or reduce “hidden junk” fees and require companies to be transparent about all fees up front. The Biden administration also finalized a rule that would make it easier for airline passengers to get quick, automatic refunds when their flights are canceled or significantly changed, and to give them up-front visibility into baggage and flight change fees.

His administration also provided economic relief to American families during the pandemic: Biden signed the American Rescue Plan Act of 2021 into law, one of the largest federal efforts to reduce poverty in the past half-century.

Among other relief measures, ARPA temporarily expanded the child tax credit, which cut the child poverty rate in the U.S. by nearly half. Through the Inflation Reduction Act, the Biden administration capped monthly insulin costs for Medicare enrollees at just $35, among other provisions that lowered drug costs.

His administration has also reduced student loan debt so that, as Biden has said, a college education can be “a ticket to the middle class, not a barrier to opportunity.” To date, his administration has canceled $168 billion in student loan debt for 4.8 million Americans.

Strong antitrust program

The Biden administration has implemented a regulatory crackdown on America’s largest corporations, particularly challenging the market dominance of tech giants Apple, Amazon, Meta and Google.

The Federal Trade Commission, led by Lina Khan, and the Justice Department’s antitrust division, led by Jonathan Kanter, have jointly brought aggressive proceedings to block the merger, spearheading an effort by Biden to fulfill a campaign promise to curb what he described as corporate greed that drives up prices.

The agencies have taken major action, restricting proposed deals between major grocery chains, airlines and pharmaceutical companies. It hasn’t been an ideal outcome—the FTC has seen several significant losses, including an attempt to block Microsoft’s $69 billion acquisition of video game maker Activision Blizzard. And many of the actions, including the Justice Department’s landmark case against Apple, could be tied up in lawsuits for years.

Mixed performance in the technology sector

Biden has taken a largely protectionist stance toward the tech industry, including signing a high-profile bill in April 2024 to ban the Chinese video-sharing app TikTok unless it finds a new owner, citing national security concerns.

He also significantly supported domestic chip manufacturing and research through the CHIPS and Science Act, which was passed in 2022 and enjoyed bipartisan support as part of an effort to help the United States regain its position as the leading producer of semiconductor chips.

But his reception in Silicon Valley has been less than friendly, as his administration has placed greater emphasis on Big Tech mergers. In 2023, the Justice Department and the FTC unveiled new guidelines aimed at blocking deals deemed anticompetitive.

Harris, meanwhile, is aiming to become the first president to come from Silicon Valley and has been received rather warmly by the tech industry.

Record growth for shareholders

Here’s how the stock market performed during each year of President Biden’s term.

2021: S&P 500 up 27%. The stock market was another winner despite the deadly Covid-19 pandemic. But investors were starting to brace for the possibility that the Fed would raise interest rates for the first time since March 2018 and end the era of “easy money.”

2022: The S&P 500 fell 19%. Stocks fell as the Federal Reserve began rapidly raising interest rates near zero to curb runaway inflation, raising concerns that high borrowing costs could erode corporate profits.

2023: S&P 500 up 24%. Stocks had a powerful year despite the Fed’s ongoing rate-raising campaign. That’s thanks in large part to the AI boom, which has boosted seven key tech stocks, known as the Magnificent Seven, poised to lead the revolution.

2024: The S&P 500 is up about 16% for the year after hitting consecutive record highs. Strong corporate earnings this year have helped lift stocks, as has the continued AI boom. Cooling inflation data in recent months and hopes of an imminent Fed rate cut have fueled even more euphoria, although stocks have fallen in recent sessions.

CNN’s Elisabeth Buchwald, Krystal Hur, Chris Isidore, Bryan Mena, Allison Morrow, Erika Tulfo, Alicia Wallace, Alex Leeds Matthews, Jeanne Sahadi, Katie Lobosco and Tami Luhby contributed to this report.