The debate between Vice President Kamala Harris and former President Donald Trump on Tuesday opened with a fiery exchange about the economy, an issue that often ranks as the top priority for voters.
The two candidates exchanged sharp barbs over the nation’s recent bout of inflation, Trump’s plan for an escalation of tariffs, and the economic proposals put forward by Harris.
Economists who spoke to ABC News offered an assessment of the attacks leveled by the two candidates, fact-checking major claims and providing context for a full evaluation of their implications.
Here’s what to know about what economists thought of key claims made during the debate:
Harris: “My opponent has a plan that I call the Trump sales tax, which would be a 20% tax on everyday goods that you rely on to get through the month.”
Harris deploys the phrase “Trump sales tax” in reference to Trump’s plan for additional tariffs in a potential second term.
Trump told Fox Business last year that a tax on all imported goods could land at 10%. In April, he proposed a higher tariff of at least 60% on Chinese goods.
Economists who spoke to ABC News confirmed that tariffs are widely thought to raise prices for consumers in the importing country. That’s because foreign producers typically pass along some or all of the tax burden to consumers in the form of higher prices, they said.
“This is generally accepted in economics,” said Stephan Weiler, a professor of economics at Colorado State University and a former Fed research officer.
Economists couldn’t verify the estimate put forward by Harris of a 20% increase on the prices of goods, in part because it’s difficult to predict exactly how foreign manufacturers might respond to tariffs.
In theory, foreign producers that control a given market could offset higher taxes by pushing the costs onto consumers with price increases, Yeva Nersisyan, a professor of economics at Franklin & Marshall College, told ABC News. However, Nersisyan added, companies in competitive industries may face more difficulty doing so.
“It’s hard to say whether that 20% number is accurate,” Nersisyan said.
Trump: “We have inflation like very few people have ever seen before. Probably the worst in our nation’s history.”
Economists who spoke to ABC News rejected the assertion that the nation’s bout of inflation marks its worst ever, noting that the U.S. endured higher price increases as recently as the 1980s.
In addition, economists said Trump overstated the extent to which the Biden administration caused the rapid rise in prices, though they acknowledged that a stimulus measure enacted by Biden may have contributed to some of the inflation.
Like many economic problems, inflation emerged due to an imbalance between supply and demand, economists said.
Hundreds of millions of people across the globe who endured pandemic-era lockdowns replaced restaurant expenditures with online orders of couches and exercise bikes. But the demand for goods and labor far outpaced supply, as COVID-19-related bottlenecks slowed delivery times and infection fears kept production workers on the sidelines.
“The number-one cause of the inflation was a supply adjustment to the COVID shock, particularly coming out of isolation,” Jeffrey Frankel, an economist at Harvard University, told ABC News.
Pandemic-era spending measures enacted by Trump and Biden may also have contributed to the price spike, economists said.
Jason Furman, a professor at Harvard University and former economic adviser to President Barack Obama, estimated that Biden’s American Rescue Plan added between 1 and 4 percentage points to the inflation rate in 2021, Roll Call reported. Michael Strain, of the conservative-leaning American Enterprise Institute, estimated that the legislation added 3 percentage points to inflation.
“One could argue that the COVID-related policies helped heat and possibly overheat the economy,” Weiler said.
In this undated stock photo, a customer examines eggs in the egg aisle of the supermarket.
STOCK PHOTO/Getty Images
Harris: “Donald Trump left us the worst unemployment since the Great Depression … what we have done is clean up Donald Trump’s mess.”
The economy had already emerged from the pandemic-induced recession and begun to recover by the time Biden took office, economists said.
However, the U.S. remained well below pre-pandemic levels in some key measures of economic health, including employment. In turn, economists said, Biden inherited an economy in need of significant rejuvenation.
The unemployment rate peaked at 14.8% in April 2020 when Trump was in office – which was indeed the highest level since the Great Depression, according to the Bureau of Labor Statistics. But unemployment rapidly declined to 6.4% in January 2021 by the time Trump left office, as the economy started to rebalance.
The effort to blame Trump for the spike in unemployment is misleading, since it resulted from a once-in-a-century pandemic, economists said.
“COVID is the tidal wave that overwhelmed the whole story,” Weiler said. “The politics of this is hyperbole.”
The COVID-induced recession lasted two months in the spring of 2020, the shortest U.S. recession ever recorded, according to the National Bureau of Economic Research, a non-profit organization that serves as the recognized authority on economic downturns. The speedy recovery was owed in part to trillions in economic stimulus enacted by Trump that March.
“It was very quick and very, very big,” Nersisyan said.
Still, the economy suffered a dearth of jobs and persistent supply blockages when Biden took office, economists said. Over the course of the Biden administration, the labor market expanded at a rapid pace while economic growth quickened. By 2022, the economy had recovered all of the jobs that were lost during the pandemic.
“The recovery from the recession had already begun when Biden took office, but it hadn’t gotten that far,” Frankel said.
Trump: “She doesn’t have a plan. She copied Biden’s plan. And it’s, like, four sentences, like, run-Spot-run. Four sentences that are just, oh, we’ll try and lower taxes.”
Trump sharply criticized Harris for a perceived lack of detailed economic proposals.
Some economists who spoke to ABC News agreed that there was an absence of a complete economic plans from Harris. However, they added, Trump has also failed to provide a detailed set of policy proposals on economic issues.
“I would like to see more detailed policy proposals from both candidates,” Anne Villamil, a professor of economics at the University of Iowa, told ABC News.
“For Harris, I would like to know how her policies would differ from current policies,” Villamil added. “For Trump, I would like to know how his policies would differ from the policies of his previous administration.”
Last month, Harris unveiled economic plans intended to ease inflation, fix the housing market, and slash taxes for middle-income families. The plans include eye-catching proposals such as a $25,000 subsidy for first-time homebuyers and a ban on grocery price gouging, the latter of which had not been put forward by Biden.
Harris has also proposed a 28% tax on long-term capital gains, which clocks in well below the 39.6% tax rate for such income put forward by Biden.
Trump has said he would renew his signature tax-cut measure, which eased taxes for individuals and corporations, while vowing to do away with taxes on tips and Social Security benefits.
“Trump is not one who has a lot of detailed policies himself,” Nersisyan said. “This is not a policy election.”
ABC News’ Jon Haworth contributed to this report.
During the recent Harris-Trump debate, economists were closely watching as the two candidates discussed their views on inflation and tariff attacks. Inflation, the rate at which the general level of prices for goods and services is rising, is a key economic indicator that can have a significant impact on the overall health of an economy. Tariff attacks, on the other hand, refer to the imposition of tariffs on imported goods, which can lead to higher prices for consumers and potentially disrupt global trade.
One of the main points of contention between Harris and Trump during the debate was the impact of their respective economic policies on inflation. Harris argued that Trump’s tax cuts for the wealthy and corporations had led to an increase in inflation, as companies passed on their tax savings to consumers in the form of higher prices. Trump, on the other hand, defended his tax cuts as a way to stimulate economic growth and create jobs, arguing that they had actually helped to keep inflation in check.
Economists have mixed views on the relationship between tax cuts and inflation. While some believe that tax cuts can lead to higher inflation by increasing demand for goods and services, others argue that they can also boost productivity and lower costs, which can help to offset any inflationary pressures. Ultimately, the impact of tax cuts on inflation will depend on a variety of factors, including the overall state of the economy and the effectiveness of other government policies.
In addition to discussing inflation, Harris and Trump also debated the use of tariffs as a tool to protect American industries from foreign competition. Trump has been a vocal supporter of tariffs, arguing that they are necessary to level the playing field for American businesses and workers. However, critics of Trump’s tariff policies have raised concerns about their impact on consumer prices and global trade.
Economists generally agree that tariffs can lead to higher prices for consumers, as companies pass on the cost of tariffs to their customers. This can be particularly harmful for low-income households, who spend a larger share of their income on basic necessities. In addition, tariffs can also disrupt global supply chains and lead to retaliatory measures from other countries, which can further harm American businesses and workers.
Overall, the debate between Harris and Trump highlighted the complex relationship between economic policies, inflation, and tariffs. While both candidates presented their own perspectives on these issues, economists will continue to closely monitor developments in these areas to assess their impact on the overall health of the economy. As the election approaches, voters will need to carefully consider these economic issues when deciding which candidate to support.
