International Business Machines (IBM) Corporation Vice Chairman Gary Cohn warned Sunday on CBS that consumers already facing “enormous pressure” financially may be disadvantaged by looming “softness” in the economy.
Within the last year U.S. voters have vocalized their concerns over the economy and inflation, making the two issues a top priority when it comes to voting this November. While President Joe Biden and Vice President Kamala Harris have defended their administration’s economic record, Cohn stated that following the COVID-19 lockdowns consumers expected the economy to “stay strong.”
“Consumers are under enormous pressure. So remember, we all came out of COVID with consumers in the best balance sheets we had seen in our lifetimes. We put enormous amount of stimulus into consumer’s balance sheets,” Cohn said. “When the economy reopened, consumers did what we really know how to do well in the United States, is not only spend what they have in their account, they use all of the capacity on their credit cards.”
“People went out and spent, they took vacations — we saw that. They spent a lot of money on their houses and they went out and got their credit cards fully charged up. They assumed that the economy was going to stay strong, they assumed that job growth was going to stay steady, they assumed that they would continue to be able to maintain that lifestyle,” Cohn said.
Cohn continued to state how the “softness in the economy” is reflected in the job market and credit card delinquencies, adding how people had once been quitting their job because they had been reassured they would be able to reach a “higher price point.”
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“We’re starting to see softness in the economy, softness in the job market. It is harder and harder to get a job. So we’re starting to see it in delinquencies in credit cards,” Cohn said. “That’s exactly where we’d start to see the softness in the economy. And people are going to continue to have trouble getting a job that pays more than the last job.”
In August, data from the the Bureau of Labor Statistics showed the federal government overestimated the number of jobs expected to be added to the economy between April 2023 and March 2024 by roughly 818,000.
“We just got done with the cycle and we’ve seen this in economic data. We’ve just got done with the cycle where a lot of people were quitting their job. People only quit their job when they believe they can get another job at a higher price point,” Cohn concluded.
Since unveiling her economic plans, Harris has received pushback on her proposals regarding a federal ban for “corporate price gouging,” as well as a proposal to give first-time homebuyers up to $25,000 in down payment assistance.
During a recent interview with Philadelphia’s 6ABC Action News, the vice president failed to directly address how she plans to make life more affordable for Americans as she instead pivoted to talking about her middle-class upbringing and lawns.
Featured Image Credit: The White House from Washington, DC
