The Economy is Struggling, And Democratic Constituents Are Suffering Most | Opinion

The U.S. economy continues to show signs that it is in a recession and that recovery is going to take a long, long time.

The housing market is serving as the canary in the coal mine.

Per CNBC, "total mortgage application volume fell 14.2%" in the last week of September, compared with the previous week. Refinancing volume dropped 18 percent for the week and "was 86% lower than the same week one year ago." Mortgage applications to purchase a home fell 13 percent and are down 37 percent from last year.

In addition, housing prices are declining, showing the "most significant monthly declines since the 2009 housing crash," per Black Knight Data & Analytics. Median home prices were down almost 1 percent in August, following a 1.05 percent drop in July. Median home prices are down 2 percent since their June peak.

Mortgage rates have more than doubled to more than 6 percent, and are likely to climb even higher, with some forecasters predicting rates as high as 7 percent.

Unfortunately, the problems are not only in the housing market.

Food insecurity is on the rise in the richest nation in the world. A recent study showed that more than 1.2 million people in the Washington D.C. region "struggled to put food on the table" in 2021. That is one third of the population in that area, per NPR. According to the USDA, more than 33 million people, including five million children, are food insecure. Interestingly, the perceived rate of food inflation grew to 22.8 percent, according to the dunnhumby Consumer Trends Tracker. The same report showed that 55 percent of consumers report they are not getting enough "of the food they want to eat, and 18% are not getting enough to eat." Almost one in three households "skipped or reduced the size of their meals in the last 12 months because there wasn't enough food."

OPEC+, the global oil cartel, agreed to cut oil production by 2 million barrels per day, approximately 2 percent of global demand. This will drive an increase in the price of gas. Capital Economics research group now expects global oil prices to rise from about $93 to $100 or more per barrel, at a time when the price of gas is already more than $6 per gallon in California.

Sadly, inflation affects the poorest Americans the most, and disproportionately impacts people of color. "Typically, food and gasoline and housing are a bigger share of total spending for lower-income households than for higher-income households," economist Dan Sichel told NPR. "Those with lower incomes tend to pay higher prices, even for similar items," NPR reports. "They may be less able to travel to cheaper stores, take advantage of seasonal discounts, or 'get the giant package of toilet paper to stash in the basement when it is on sale.'"

A Harvard University poll found that Black Americans are "substantially more likely than whites to report they are currently having serious financial issues problems (55% to 38%)." Black respondents to the poll also reported higher levels of food insecurity and were less likely to have enough emergency savings for at least one month of expenses.

The same study showed that Latinos are "substantially more likely than whites to report they are currently having serious financial problems," to not have sufficient emergency savings, and to have difficulty affording food or rent.

To date, the U.S. jobs market has proven to be incredibly resilient, with the unemployment rate hovering at 3.7 percent. But cracks are starting to show. The Federal Reserve is expecting the nation's unemployment rate to rise to 4.4 percent, however, and perhaps as high as 5 percent. That would mean up to 2.2 million newly unemployed Americans.

Again, minorities are more heavily impacted by unemployment. While the overall unemployment rate remains low, the unemployment rate for African Americans rose to 6 percent this year.

The number of available jobs is decreasing as well. "U.S. job openings fell by the most in nearly 2-1/2 years in August," falling to 10.1 million, according to Reuters. August's decline was the largest since April 2020, when the economy was in the midst of the COVID-19 pandemic.

With the midterm elections just over a month away, Democrats must be worried. "Bidenflation" is impacting their key constituents, and it is unclear what, if anything, they can do to bring about a turnaround. The question is, will Republicans be able to take advantage and make the case to voters who historically vote Democrat?

Jim Nelles is a supply chain consultant based in Chicago, IL. He has served as a Chief Procurement Officer, Chief Supply Chain Officer, and a Chief Operations Officer for multiple companies. Jim served his country as a Naval Officer after attending college on an NROTC scholarship. He has a BA from Northwestern University in Economics and French as well as a Masters in Management from the JL Kellogg Graduate School of Business.

The views expressed in this article are the writer's own.