‘Great Kamala Crash of 2024’: Trump and allies seize on market downturn to attack Harris

WASHINGTON – Republican Donald Trump didn’t wait for the opening bell before blaming Aug 5’s market sell-off on US Vice-President Kamala Harris.

“Stock markets are crashing, jobs numbers are terrible, we are heading to World War III, and we have two of the most incompetent ‘leaders’ in history,” the former US president and Republican presidential nominee wrote in a post on Truth Social at 8.12am local time (8.12pm Singapore time).

“This is not good.”

Trump did not mention that markets had suffered far greater single-day losses when he was US president, or that economists blamed a variety of factors – including a disappointing July jobs report,

a plunge in Japanese markets earlier in the day

and a growing consensus among investors that the US Federal Reserve has waited too long to start cutting interest rates – for Aug 5’s slide.

He also did not mention that earlier in 2024, he had claimed credit for a surge in stock prices, which he said reflected confidence he would be re-elected.

What Trump was engaged in was a calculated attempt at political marketing. By 9.45am on Aug 5, less than an hour after US markets opened, Trump branded what would become a 3 per cent decline for the day in the S&P 500 the “Kamala Crash”.

By lunchtime, it was official party messaging: The Republican National Committee hyped the “Great Kamala Crash of 2024”, and the Trump campaign had produced and circulated on social media a video tying the US Vice-President to Aug 5’s dip in the markets. By the afternoon, the Trump forces had turned “KamalaCrash” into a trending subject on the social platform X.

The coordinated effort underscored Trump’s long-standing fixation on stock indexes as a barometer of economic health and even as a substitute for polls – a measure of his own performance and popularity. Yet markets can rise and fall sharply from day to day; Japan’s stock exchange surged in early trading on Aug 6 after big losses on Aug 5.

It also reinforced the degree to which economic messaging, and the health of the economy itself, will play a key role in the sprint finish before the presidential vote in November.

“What middle-class families need is steady economic stewardship, not chaotic ranting lies,” Mr Ammar Moussa, a Harris campaign spokeman, responded in a statement.

“Donald Trump had the worst jobs record of any modern president, and oversaw some of the worst days in the stock market in history while spending his presidency lining the pockets of his wealthy friends who shipped American jobs overseas. Economic experts agree: His plans would raise costs on working families by US$2,500 (S$3,325) a year and ‘supercharge inflation’.”

Ms Harris has stressed economic optimism in her speeches. She portrays the economy as strong and tries to cast Trump’s policy proposals, like new taxes on imported goods, as a threat to growth and a possible spark of recession.

“We believe in a future that keeps America’s economy the strongest in the world,” she said in Houston last week. “Where every person has the opportunity to build a business, to own a home, to build intergenerational wealth.”

American voters consistently tell pollsters that the economy and consumer prices are the most important issues facing the country. Trump and his Democratic opponent, Ms Harris, are seeking to sell voters on diametrically opposite stories about the economy’s health.

Trump wants voters to believe that the economy is on the brink of catastrophe and that Ms Harris and US President Joe Biden are to blame. He has leaned into a negative view of the economy that until now has largely focused on the nation’s prolonged bout of high inflation earlier in Mr Biden’s term.

Polls have consistently shown that a majority of Americans believe the economy is in recession, even though economic statistics suggest it is not, a fact that vexed Mr Biden as he tried to campaign on the actual record.

Economic growth was surprisingly strong in the first half of 2024. Job growth has remained relatively strong, even with the slowdown in job creation in July. Inflation has finally fallen to more normal historical rates.

Trump has set up this moment as a heads-he-wins, tails-she-loses scenario. He took credit for the stock market’s double-digit gains earlier in 2024 – claiming it was booming because investors thought he would be president in 2025.

Now that global markets are falling, Trump is claiming it’s the fault of Biden-Harris policies.

Economists and analysts dismissed Trump’s stock-market boasts earlier in 2024 and his critique of Ms Harris on Aug 5.

“Typically, presidents take credit when the market is up and are probably unfairly blamed when the market is down,” said Mr Chris Krueger, who works at the research group TD Cowen.

Mr Krueger pointed to the plunging Nikkei, which fell 12.4 per cent on Aug 5, its biggest decline since the Black Monday crash of October 1987. “How any US politician bears responsibility for that is a bit mystifying, but that’s sort of table stakes for where we are in the 2024 election,” he said in an interview on Aug 5.

Goldman Sachs economists raised their odds of a recession

in 2025 on Aug 5 to 25 per cent, from 15 per cent. Mr Alec Phillips, Goldman’s chief political economist, said there was little evidence the sell-off was hurting Ms Harris right away, citing election prediction markets.

“Harris’ odds in prediction markets didn’t move following the jobs report on Aug 3, and are still at basically the same level now,” Mr Phillips said. “So at least the consensus view so far is that these numbers alone don’t have much bearing on the election outlook.”

The US Federal Reserve could still affect the outlook, though. If officials at the central bank cut interest rates in September, they could help to push down borrowing costs for Americans buying homes, cars and other big-ticket items on credit – a move that White House economists have long believed could help reinforce the idea that inflation is under control and that the outlook for consumers is improving.

That could help Ms Harris, especially if the Fed makes a larger-than-expected rate cut in a bid to jolt economic activity.

But many Democrats worry that the Fed, by holding rates steady in July, may have hurt Ms Harris – by opening the door for the market sell-off, which appears to be driven in part by investors’ fears that Fed officials waited too long to start cutting rates. NYTIMES