It’s the economy, stupid. Here’s what you need to know about it for the presidential debate

Analysis by Elisabeth Buchwald, CNN

New York (CNN) — Bill Clinton’s campaign was right on the money when it coined the famous “It’s the economy, stupid” phrase in 1992. That’s because the economy has consistently ranked among the top — if not the very top — voter issues in presidential election after presidential election.

The current contest is far from an exception, with close to 90% of respondents in a May ABC News/Ipsos poll indicating that the economy is the most important issue in determining who gets their vote in November. That means it’s all but guaranteed to be a major talking point during Thursday night’s debate, which kicks off at 9 pm ET on CNN.

President Joe Biden and former President Donald Trump have polar opposite views on the economy — and both undoubtedly will try to sell you on their visions, policies and records.

To make heads or tails of what they say (or if you’re trying to impress anyone you might be watching the debate with), it’s good to make sure you understand the economy we’re in right now.

Disclaimer: The topics below are in no way an exhaustive list of everything going on in the US economy, plus, everyone experiences it differently.

Unemployment: Low, but with warning signs ahead

The nation’s unemployment rate stayed below 4% for 27 months, its longest such streak and a match for a period in the 1960s. That streak ended last month, when the unemployment rate rose to 4% from 3.9%.

At the same time, the number of job openings in the US recently fell to a new three-year low, another sign of cooling in the labor market. That means job seekers might find it harder to get hired.

In particular, the job market for recent college graduates has weakened. The unemployment rate for bachelor’s degree recipients aged 20 to 29 is above 12%, an almost four-percentage-point increase from a year ago, according to Bureau of Labor Statistics data.

Inflation: Elevated, but cooling

Inflation slowed more than expected last month, falling to 3.3% from 3.4% in April. By comparison, at this time last year it was 4%, and two years ago it was 9%.

But there’s a reason why you’re probably feeling like everything is still really expensive.

While discounts are starting to appear more at big-box retailers like Target and Walmart and fast-food giants like McDonald’s and Wendy’s, price cuts aren’t occurring across the board. That’s because when inflation cools off, it simply means that the pace of price increases is slowing. However, it does not mean that the actual prices we pay for goods and services are lower than they were a year ago.

Housing: Still unaffordable

Home prices are at a record high and have been climbing for 11 straight months as housing shortages persist. That’s partly because many homeowners who locked in ultra-low mortgages during the pandemic don’t want to move and risk having to pay a much higher mortgage rate.

Average 30-year fixed-rate mortgages recently hit the highest level of the year. While they’ve started to fall, mortgage rates are still higher than anything seen in the decade before 2022.

Mortgage rates are so high in part because inflation is above the Fed’s 2% target. As a result, the central bank has held off cutting interest rates, which would otherwise make it cheaper to get a mortgage.

In turn, many would-be homebuyers are renting for longer than they otherwise may have, which is driving rents higher, too.

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