I’m an Economist: My Prediction for Household Incomes in 2025 If Kamala Harris Wins the Election
Written by
Laura Beck
Edited by
Levi Leidy
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The Nov. 5 election is right around the corner and early voting is starting in many states. Knowing this, many Americans are wondering how a Kamala Harris win may affect their household income in 2025. Would they see growth or deflation — or would things stay pretty much the same?
GOBankingRates spoke with two professors with decades of experience in finance and economics. They offered a nuanced perspective on how the political landscape could shape Americans’ financial futures.
Here’s how economists predict household incomes could be affected in 2025 if Harris wins the election.
Moderate Growth Expected Under a Split Government
According to David Kass, clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business, if Harris wins the presidency but Republicans maintain control of either the House or Senate, we can expect a relatively stable economic environment.
“If Kamala Harris wins the election, household incomes in 2025 should grow in the 2%-4% range (after inflation) since moderate economic growth is likely to continue throughout the year,” Kass shared. In this situation, Kass predicts modest but steady growth in household incomes.
“Many of Vice President Harris’ economic plans seem to be focused on long-term growth and stability, so they would have limited impact on changing the current direction of household incomes in 2025,” shared Jonathan Ernest, PhD and assistant professor of economics at Case Western Reserve University. “With a fairly robust labor market and increases in income outpacing inflation over the past couple of years, and with inflation continuing to decrease toward the Fed’s 2% goal, I would expect a continued increase in real median household income in 2025 under a Harris administration.”
Potential Boost for Low-Wage Workers Under Democrat Control
Kass painted a slightly different picture if Democrats secure a trifecta – control of the White House, House and Senate. In this scenario, he thinks there are potential benefits for low-income households. “If Democrats control both the House and the Senate in addition to the White House, disposable income for low-wage workers may increase through the expansion of social programs such as child tax credits, healthcare subsidies and housing assistance,” he said.
According to this prediction, a Democrat-controlled government might prioritize policies aimed at reducing income inequality and providing additional support to lower-income families.
Higher Earners May Face Increased Taxes
While lower-income households could see gains, Kass thinks the situation could be different for higher earners. “However, likely capital gains tax increases would have a negative impact on the disposable incomes of those with higher incomes,” he shared.
Ernest agreed. “I would expect that the Harris campaign’s focus on increasing the purchasing power of lower- and middle-income workers would dictate rising net incomes on average for these groups, while we could see some decreases in net incomes for the country’s highest earners,” he said.
Wealthier people might have less spending money if the government raises taxes on their investments. Consequently, some of that wealth could get spread to other parts of society.
Potential Impact on Investors and Retirement Plans
Kass pointed out potential changes for investors and those with retirement plans tied to the stock market. “Furthermore, a Democrat-controlled Congress (and White House) would likely result in the increase in corporate income taxes that could result in a decline in the prices of equities, realized capital losses for investors and a reduction in the values of retirement plans that contain investments in the stock market,” he said.
If there were to be a decline in stock prices, that could affect retirement investments. Kass added, “This would likely lead to a reduction in disposable income for those with these investments.”
Brandon Galici, CFP at Galici Financial, offered a more tempered perspective on the potential impact of presidential politics on retirement savings and the stock market. Galici explained that historically, the stock market has trended upward regardless of which party controls the White House. “Whether a Democrat or Republican occupies the White House, the long-term trend of the stock market has been positive,” he shared. “This is because numerous factors beyond presidential control influence market performance.”
Price Controls and Labor Market
Ernest thinks some proposed policies could potentially have unintended consequences. “Plans to control prices could lead to shortages of goods and services and decrease the willingness of companies to hire workers to create and provide them,” he explained.
Support for New Parents
Ernest also pointed out that “tax rebates for new parents would supplement incomes and increase purchasing power among these groups.” This policy could provide financial relief for young families, potentially offsetting other economic pressures.
Trade Policies and Consumer Prices
Ernest shared the potential benefits of Harris’ approach to international trade. “A reliance on gains from trade and a decreased willingness to impose tariffs on a variety of goods and services could mean that U.S. consumers can continue to buy products at a lower price,” he said. This could help stretch household budgets further.
Ernest said this trade approach could allow Americans to “focus their skills on areas where they have a comparative advantage in production.” This could lead to increased job specialization and productivity, which might boost wages.
Balancing Act: Weighing Potential Gains and Losses
Kass thinks that if Harris becomes president, it won’t affect everyone’s income the same way in 2025. People with lower-paying jobs might end up with more money to spend, thanks to new policies designed to help them. Higher earners might face higher taxes. Of course, all of this remains to be seen. Until then, all we can do is practice good financial health – savings, investing and planning for the future.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. For more coverage on this topic, please check out I’m an Economist: My Prediction for Household Incomes in 2025 If Trump Wins the Election.
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