TBL Thinks: Swing States, Inflation Implications, and Crypto Lobbies

Oct 16, 2024

Dear Readers,

It’s Thinking Time! Maybe because it’s what people want, or the fact that we just voted, but this week we cover swing states, economists’ views on inflation if Trump comes back to power, and the crypto-lobby in congress.

TBL Thinks is our way to summarize the most important paywalled, longer reads relevant to global macroeconomics, helping you cut through the noise. With that in mind, please enjoy.

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Swing States Getting Squeezed

Swing-State Consumers Hurt More than Most in Credit Card Squeeze (BBG) Households across the US are feeling the pinch of high borrowing costs, and swing-state voters rank among those hit harder. Credit card delinquencies are running at a higher than national average in six of the seven swing states, and although consumer delinquencies are not at historic highs, they have been steadily climbing since the pandemic.
Personal finance has become a contentious issue in the contest between the Trump and Harris administrations, as the former plays up the horrors of high inflation and borrowing costs, and the latter touts gains in income, wealth, and employment under the current administration. Voters in these key states rate Trump higher than Harris on managing the economy, although Harris has a narrow lead on trusting a candidate to help with personal debt.
Interest rates on US credit cards are at a multi-decade high of above 20% and have resulted in difficulties with repayments, and an increase in early-stage delinquencies.
Except for Wisconsin, all swing states posted delinquency rates higher than the national average, which stands at 0.69% as of the end of the second quarter—Pennsylvania, followed by Georgia and Michigan saw the sharpest increase during the period.
Similarly, Georgia and North Carolina have auto delinquency rates significantly higher than the national average of 2%.
In four of the seven swing states, student borrowers have an average debt that is above the nationwide figure, with the biggest gap seen in Georgia.
Renters in swing states are also having a tougher time than in the rest of the country—nationally, rent has risen approximately 22% since Covid, but five of the seven swing states have seen rent hikes at even higher paces, with Wisconsin and Michigan posting the largest increase.

Click on the image to play out different scenarios for the election outcome

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You’re Fired?

Economists Say Inflation, Deficits Will be Higher Under Trump Than Harris (WSJ) According to surveys conducted by the Wall Street Journal, most economists think inflation, interest rates and deficits would be higher under policies proposed by Trump’s second administration than those proposed by Harris. The results from the most recent survey held in early October echo the results of the publication’s survey conducted in July, when Trump was facing Biden.
Both Trump and Harris have offered significant new policy proposals, with Trump calling for tax cuts on overtime pay and Social Security benefits, and breaks for auto-loan interest and state and local taxes, and Harris suggesting new credits for newborn children and home buying.
Of the 50 economists that participated in WSJ’s survey, 68% believe that prices would rise higher under Trump than Harris, up from 56% in July.
Since July, Trump has proposed across-the-board tariffs of 10-20% on imported goods, and 60% or higher tariffs on imports from China. “Studies of tariffs imposed in his first term found they were often passed through to importers or consumers as higher costs or prices and hurt industries that depend on imported inputs”.
On the difference between the two candidates regarding future inflation, there are far too many variables to definitively opine, especially because we know that government deficits have been the main culprit this decade. It’s not like we’re expecting either candidate to start running a balanced budget.

Congress for Crypto?

Want a Crypto-Friendly Congress? Run Ads That Don’t Mention Crypto (WSJ) A trio of super political-action committees (PACs) is working hard to elect candidates to pass crypto legislation in Congress that would allow the industry to operate freely in the US, and spent more than $62 million on ads in September, their largest monthly spend to date. The trio has together raised nearly $170 million from the crypto industry, including Coinbase.
Although the ads are paid for by the crypto super PAC, none of them mention the word “crypto” in them, and instead focus on domestic jobs, immigration, and other contentious key issues driving the election. This move to provide “off-topic messaging” is not a new one in political advertising, and is seen in messaging by the environmental and pro-Israel lobbies.
The crypto industry has been trying to wipe the stain that SBF’s fraud and eventual arrest left on it—SBF and members of his team were among the biggest political donors in the 2022 midterm election, with SBF’s personal donation amounting to $40 million, and collectively over $70 million in under 18 months.
With the subsequent suing of Binance, Coinbase, and other crypto platforms by the SEC, it’s a small wonder the industry is pushing back against the agency and campaigning for new legislation to regulate the industry.
Trump has emerged as an ally for the crypto industry and has pledged to create a strategic bitcoin reserve to hold the nation’s supply. We’ll believe it when we see it, but we are somewhat optimistic about seriously pro-bitcoin efforts out of the next administration if Trump returns.

Until next time,

TBL Thinks