Republican presidential candidate Donald Trump hopes to use the significant sell-off in the US stock market to attack his Democratic opponent Kamala Harris and see who is most capable of leading the economy.
Trump's campaign team called Monday's fall the 'Kamala crash', a message aimed at weakening the energy created by the Vice President's candidacy. But on Tuesday, Wall Street stocks rebounded and rose, and several economists said economic data countered Trump's comments about an impending crisis, as the unemployment rate remains relatively low and inflation has eased somewhat.
Trump has long broken with political convention by openly encouraging market volatility, hoping to enhance his own qualifications for the presidency. For him, the turmoil is an opportunity to showcase his business skills. Trump's allies and outside strategists have long urged him to focus more on wallet issues that resonate with voters outside the Republican Party.
According to an AP-NORC poll conducted this April, Americans are more likely to believe that President Trump helped create job opportunities and lower the cost of living during his administration than President Biden's government.
It is unclear whether the recent volatility of the stock market means that global economic problems are more severe, which may distract people's attention from Harris's core campaign themes, such as protecting abortion rights and portraying Trump as a threat to American freedom. Currently, many economists say that major investors are less interested in the presidential race than they are in the Fed's dynamics, as the Fed faces pressure to lower benchmark interest rates.
'Our economy is still moving forward,' said Gregory Daco, chief economist at consulting firm EY-Parthenon. 'What we saw in the market panic - which may already be fading - was an exaggerated interpretation of the Fed's lagging behind, rather than weakness in the underlying economy.'
Trump has long placed his election bets on the market.
On Monday, Trump posted more than a dozen messages on his social media network about the market and US economic policy, and released a video from the Republican campaign team that attempted to link Harris to market news and last month's end of the re-election campaign of President Biden. In the video, Harris says 'Bidenomics is working,' while news commentators describe the stock market decline.
In a post on his Truth Social account, Trump said, 'Voters face a choice - Trump's prosperity or Kamala's crash and the Great Depression of 2024.'
Trump proposed an increase in energy production and the exemption of income tax on tips and social security contributions. This information has been at times overwhelmed by a series of news stories - including an attempt by a gunman to assassinate him at a rally in July - and his own mixed messages and personal attacks on Harris's racial identity and other issues.
Chris Lazzavita, a senior adviser on the Trump campaign, believes that Monday's stock market decline and rising food and gasoline prices during President Biden's term are evidence of policy failure.
'Ultimately, the results of bad policy are undeniable,' he said. 'The impact of bad policy is undeniable. It allows us to once again prove that this is the consequence of bad policy.'
The Harris campaign team declined to comment. But Trump's comments have drawn condemnation from some Democrats for cheering on an economic downturn that, if realized, could lead to millions of job losses or retiree savings losses.
Larry Summers, an economist at Harvard University who served as Treasury Secretary during President Clinton's term in office, said: 'This is a foolish judgment, not supported by any serious data analysis. While there is increased uncertainty and risk in the economy, saying that it will lead to a recession is extremely irresponsible.'
Trump has always liked to attribute the rise and fall of the stock market to himself. In 2020, he said that if he had not been re-elected that year, the stock market would have crashed. He eventually failed to win re-election. During Biden's presidency, the S&P 500 index rose by about 35%.
In early January of this year, Trump told the late Lou Dobbs, 'When the economy crashes, I hope it happens within the next 12 months because I don't want to be Herbert Hoover.'
Later that month, as the S&P 500 index hit another historic high, Trump tried to take credit. In a social media post, Trump said, 'This is Trump's market, because I'm polling very well against Biden, and investors predict I'll win, which will push the stock market up.'
Depressed markets can bring good or bad news.
The financial markets are a double-edged sword: falling stock prices can damage people's retirement savings and prompt them to reduce spending, but selling is also accompanied by falling interest rates and oil prices - which could help ease some of the inflation pressures felt by consumers, pressures that have politically hurt the Democrats.
In fact, the market's reaction to the sell-off is betting that the Fed will be more aggressive in cutting interest rates to support the economy, something Trump has warned against, fearing it could help Harris.
The FedWatch tool from CME Group estimates that the Fed will cut the benchmark interest rate by 0.5% at its next meeting in September, which is double the amount from a week ago. Such low rates will almost certainly lead to a decrease in mortgage and auto loan rates - a potential boost for Harris' campaign at the start of voting.
The chairman and vice chairman of the Federal Reserve are appointed by the President and approved by the Senate, but the Fed is independent of the White House in setting interest rates.