In Arizona, a growing Hispanic electorate should help Democrats. Yet Donald Trump is gaining ground
|Phoenix and Tucson
Ruben Gallego, a Democrat, first won elected office in Arizona in 2010, a time of fierce battles over immigration. That year, Republicans passed SB1070, known as the “show me your papers” law, which required state police to ask individuals they suspected of being undocumented to provide proof of their status. Joe Arpaio, the publicity-minded sheriff in Arizona’s most populous county, recruited right-leaning Hollywood actors to a “posse” he formed to track down illegal migrants. Although the Supreme Court struck down most of SB1070’s provisions and voters ousted Mr Arpaio in 2016, “those scars aren’t going away,” says Mr Gallego, now a congressman running for an open Senate seat. He says the legacy of Latino activism from the Arpaio era may explain why, in 2020, Arizona Latinos voted for Joe Biden in higher numbers than Latinos nationally did, helping to deliver Mr Biden a narrow 10,000-vote victory in the state.
Yet Donald Trump is once again testing Democrats’ assumptions. He gained some 90,000 Latino voters in Arizona between 2016 and 2020 despite having pardoned Mr Arpaio for a criminal-contempt conviction, calling him an “American patriot” who “kept Arizona safe”. And if current polling is anything to go by, Mr Trump looks set to cut further into Mr Biden’s margins with Latino voters come November.
The Latino electorate is growing unusually fast and a majority still prefers Democrats. Of the six swing states likely to decide the presidential election in November (the other five being Georgia, Michigan, Nevada, Pennsylvania and Wisconsin), Arizona has the largest share of Latino voters. Mr Trump is clearly gaining popularity among Hispanics. However, current polling suggests that Latino voters still prefer Democrats overall, just by a smaller margin than in the past—meaning that it is Mr Biden who will benefit from the growth in Latino voters. The outcome in Arizona will depend largely on the race between these two trends.
The Arizona contest reflects fluidity in the national Latino vote. The group has never constituted a political monolith. It includes both Florida’s right-leaning refugees from Cuba’s socialist dictatorship and California’s proud leftist heirs to Chicano activism. Yet because, on average, Latino voters came to America more recently than non-Hispanic white and black Americans, they are less likely to have inherited a strong party affiliation from their parents or grandparents. They also “are more likely to hold what political scientists call cross-cutting identities”, or traits more commonly found among people outside one’s political tribe, says Samara Klar, a political scientist at the University of Arizona in Tucson. An evangelical Democrat might sound like an oxymoron but half of evangelical Latinos say the Democratic Party represents their interests. Because of cross-cutting identities, “Latino voters know a lot more people from the other party and they’re less hostile” towards them, notes Dr Klar.
Latinos also tend to have less extreme views. Compared with white Americans, they are less likely to identify as very conservative or very liberal. In a recent YouGov/The Economist poll one in seven said they do not know where they fall on the political spectrum, three times the number of white Americans who said the same.
Given these attributes, it should be little surprise that although Latinos as a whole lean Democratic, millions have voted for Republican candidates. Exit polls suggest that as far back as 1984 Ronald Reagan won some 37% of the Latino vote. By 2004 George W. Bush’s approximate 40% share was a high-water mark that even Mr Trump has yet to achieve.
Democrats have assumed at their peril that Latinos are a natural constituency and share many of the party’s (increasingly) progressive preferences. “Latinos are not the black vote and Democrats just don’t understand that,” says Mike Madrid, a veteran Republican strategist. Yet Republicans have at times fallen into the same trap, assuming that Latinos leaned so Democratic that courting them was futile. “There were no Latino organisers in the Republican Party for 30 years,” adds Mr Madrid.
That has changed. In 2020 Republicans made gains with Latinos across the board. Voter profiles from Catalist, a political-data firm that helps Democrats, show that although Democrats won Latinos outright, Republicans increased their vote share among all subgroups of Latino voters. Their strides were especially large with non-college-educated Latinos. They swung 11 percentage points to the right between 2016 and 2020. Republicans also gained six points among college-educated Latinos. And while Mr Trump did not generally make notable gains among young voters between 2016 and 2020, young Latinos lurched to the right. Mr Trump’s share of votes from 18- to 29-year-old Latinos increased from 21% to 31%.
Some of this Republican momentum might be a reversion to the mean. Latino support for Barack Obama, the first minority nominee, and Hillary Clinton, the first female one, may have been unusually strong. Without Mrs Clinton to inspire them, Latinas swung towards Mr Trump by 12 percentage points in 2020. But why else did Republican gains materialise in such a pronounced way in 2020?
Covid may have been a factor. The disease disproportionately killed Latinos and strained their incomes. Some 24% of Latinos were employed as low-income front-line workers, more than any other race or ethnicity. About one in four new businesses are Hispanic-owned. So although Democrats’ focus on lockdowns and containing the disease may have saved many Latinos’ lives, it was perceived as threatening their livelihoods. Meanwhile, Mr Trump and Republican governors across the country advocated for fewer restrictions and a swift return to normal. According to a report by Equis Research, an outfit that studies Latino political behaviour, “Latino voters saw the 2020 election as a referendum on the economy…in a way they hadn’t in 2016.”
About 85% of Arizona’s Latino voters trace their origins to Mexico, a cohort whose views typically track Latino national averages. Yet whereas Democrats’ lead over Republicans among Latinos shrank by 16 points nationally in 2020, in Arizona their lead narrowed by only 9.6 points. Had Mr Trump performed among Arizona Latinos as he did nationally he would have won the state. His prospects have improved since then. Even after accounting for Democrats’ strength in Arizona, current polling suggests Mr Biden’s chances of winning the state in November are on a knife’s edge.
Holding constant the advantage Democrats had among Latinos in Arizona in 2020, Mr Biden is currently up by 17 percentage points among Latinos in the state, an 8.4-point shift to the right. An equivalent erosion in support would have cost Mr Biden 50,000 votes in 2020, enough for him to lose the state. Yet Republicans appear poorly positioned to seize upon their gains as the 2024 general-election campaign gets under way. Four years ago the Republican National Committee (RNC) invested early and heavily to win over Latino voters. This year the RNC is starved for cash. It has just $8m on hand compared with $77m at this point in 2020. And the Arizona Republican Party has been hobbled by dysfunction and factional disputes. All this bodes ill because campaign pros say the formula for winning an election that requires a surge in turnout is simple: spend money and reach out to voters early and often.
Mr Biden could still win the White House while losing Arizona. Assuming that the forecasts of a tight race prove accurate, and that Mr Biden holds on to Pennsylvania and Michigan, which are his strongest prospects among the half-dozen swing states, he would need to win at least one more of them. But Mr Biden’s loosening grip on the Latino vote— which is a significant factor in other closely contested states, particularly Nevada—is hardly encouraging.
Democrats are betting that the electoral maths will continue to favour them in Arizona because the Latino electorate will continue to grow. (They also expect Mr Biden’s standing with voters to improve by November.) The number of Latinos voting in Arizona has in fact increased steadily over the past two decades. This year alone there will be 150,000 newly eligible Latino voters in the state. And Arizona Latinos seem particularly motivated. In 2020 a striking 67% of eligible Latino voters in Arizona went to the polls, compared with 54% nationally (which was the lowest of all major racial and ethnic groups). If Latino turnout again reaches 67% in November, that would mean that Democrats could lose nearly four points from their Arizona margins over Republicans in 2020 and still net just as many votes.
Yet it is not a sure bet that Latinos will comprise a larger share of the electorate in 2024. Mr Biden and Mr Trump are both deeply unpopular candidates. Latinos are especially lukewarm on both. In national-level polling from YouGov/The Economist Hispanic respondents are roughly twice as likely as white ones to say that neither candidate would do a good job handling the issues they prioritise: the economy, inflation, health care and immigration. Among those who select a candidate, Mr Biden is viewed as stronger on health care while Mr Trump is seen as stronger on immigration.
Latino attitudes about immigration do not align neatly with the policies of either major party. Polling from Unidos, a lobbying group, found that roughly 83% of the Latinos they surveyed in Arizona in November 2023 supported a pathway to citizenship for undocumented immigrants, long a Democratic goal. Yet in that same survey 63% favoured securing the border, the signature cause of Republicans. “Republicans only want border security. They don’t want a pathway to citizenship…they just want moats and crocodiles and hot oil on the border,” argues Mr Madrid. And Democrats are often seen as having prioritised everything but a secure border. Between July and October of 2023 Arizona had more migrant encounters on its southern border than any other state and the crisis has persisted this year. Republicans will be hoping that Democrats bear the brunt of the political fallout.
Economic issues may also hurt Mr Biden. Until 2019 housing in the Phoenix metropolitan area, where two-thirds of the state’s population lives, was cheaper than the nationwide average. Residents there now shell out 12% more than average. Inflation also spiked higher in Phoenix during 2022 than in any other city, although it has since fallen below the national average. In November 2023 some 59% of Latinos in the state said inflation was one of their most pressing concerns. That cannot be helping Mr Biden’s standing.
These perceptions may yet change as inflation softens. But views on access to abortion tend to be more fixed, and here Democrats retain an advantage. Some 65% of Arizona Latinos think that, no matter their personal views, it is wrong to make abortion illegal. In the aftermath of the Dobbs decision in 2022, which overturned the constitutional right to abortion, a surge of women registered to vote in Arizona. In November Arizonans may vote on a referendum that would protect a woman’s right to an abortion through viability, or about 24 weeks of pregnancy. That could increase Democrat-leaning turnout.
Political campaigns come and go, but Democrats’ outreach to Latinos is maintained during off-cycle years with a vast network of grassroots Latino organisations that hew progressive. “This does not exist on the Republican side of the equation,” laments Helder Toste, a former field director at the Republican National Senatorial Committee.
These dynamics will affect more than just the presidential ticket. They may well help decide which party controls the House and the Senate. Mr Gallego, who currently represents parts of Phoenix in the House of Representatives, will probably do battle with Kari Lake, a Trump acolyte and election-denier, for Kyrsten Sinema’s open Senate seat. The state also has two competitive House races. One features an incumbent and rising star, Juan Ciscomani, a Mexican-born Republican who gave the party’s Spanish-language response to Joe Biden’s state-of-the-union speech in 2023.
The election is still more than seven months away and many Latino voters have not tuned in yet. According to polling from YouGov/The Economist, 38% of Hispanic respondents, compared with 23% of white respondents, say they are paying little or no attention to the 2024 presidential campaigns. In the autumn, when more Latino voters take note, they are likely to be bombarded with messages that the fate of the nation lies in their hands. In Arizona at least, the adverts will not be all exaggeration. ■
Sources: YouGov; Catalist; Redistricting Data Hub; US Census Bureau; OpenStreetMap; Pew Research Centre; Federal Election Commission; All About Redistricting; ArcGIS; The Economist
The columns of Royal Exchange are dressed for Christmas, at Bank in the City of London, the capital’s financial district, on 20th November 2024, in London, England.
Richard Baker | In Pictures | Getty Images
LONDON — U.K. inflation rose to 2.6% in November, the Office for National Statistics said Wednesday, marking the second straight monthly increase in the headline figure.
The reading was in line with the forecast of economists polled by Reuters, and climbed from 2.3% in October.
Core inflation, excluding energy, food, alcohol and tobacco, came in at 3.5%, just under a Reuters forecast of 3.6%.
Headline price rises hit a three-and-a-half year low of 1.7% in September, but was expected to tick higher in the following months, partly due to an increase in the regulator-set energy price cap this winter.
“This upwards trajectory looks set to continue over the next few months,” Joe Nellis, economic adviser at accountancy MHA, said in emailed comments on Wednesday, citing the energy market and “the long-term pressure of a tight domestic labor market.”
Persistent inflation in the services sector, the dominant part of the U.K. economy, has led money markets to price in almost no chance of an interest rate cut during the Bank of England’s final meeting of the year on Thursday. Those bets were solidified earlier this week when the ONS reported that regular wage growth strengthened to 5.2% over the August-October period, up from 4.9% over July-September.
The November data showed services inflation was unchanged at 5%.
The U.S. Federal Reserve is widely expected to trim rates by a quarter point at its own meeting on Wednesday, taking total cuts of the year to a full percentage point. Some skepticism lingers over whether it should take this step, given inflationary pressures.
This is a breaking news story and will be updated shortly.
Federal Reserve Chair Jerome Powell speaks during a news conference following the November 6-7, 2024, Federal Open Market Committee meeting at William McChesney Martin Jr. Federal Reserve Board Building, in Washington, DC, November 7, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images
Inflation is stubbornly above target, the economy is growing at about a 3% pace and the labor market is holding strong. Put it all together and it sounds like a perfect recipe for the Federal Reserve to raise interest rates or at least to stay put.
That’s not what is likely to happen, however, when the Federal Open Market Committee, the central bank’s rate-setting entity, announces its policy decision Wednesday.
Instead, futures market traders are pricing in a near-certainty that the FOMC actually will lower its benchmark overnight borrowing rate by a quarter percentage point, or 25 basis points. That would take it down to a target range of 4.25%-4.5%.
Even with the high level of market anticipation, it could be a decision that comes under an unusual level of scrutiny. A CNBC survey found that while 93% of respondents said they expect a cut, only 63% said it is the right thing to do.
“I’d be inclined to say ‘no cut,'” former Kansas City Fed President Esther George said Tuesday during a CNBC “Squawk Box” interview. “Let’s wait and see how the data comes in. Twenty-five basis points usually doesn’t make or break where we are, but I do think it is a time to signal to markets and to the public that they have not taken their eye off the ball of inflation.”
Inflation indeed remains a nettlesome problem for policymakers.
While the annual rate has come down substantially from its 40-year peak in mid-2022, it has been mired around the 2.5%-3% range for much of 2024. The Fed targets inflation at 2%.
The Commerce Department is expected to report Friday that the personal consumption expenditures price index, the Fed’s preferred inflation gauge, ticked higher in November to 2.5%, or 2.9% on the core reading that excludes food and energy.
Justifying a rate cut in that environment will require some deft communication from Chair Jerome Powell and the committee. Former Boston Fed President Eric Rosengren also recently told CNBC that he would not cut at this meeting.
“They’re very clear about what their target is, and as we’re watching inflation data come in, we’re seeing that it’s not continuing to decelerate in the same manner that it had earlier,” George said. “So that, I think, is a reason to be cautious and to really think about how much of this easing of policy is required to keep the economy on track.”
Fed officials who have spoken in favor of cutting say that policy doesn’t need to be as restrictive in the current environment and they don’t want to risk damaging the labor market.
Chance of a ‘hawkish cut’
If the Fed follows through on the cut, it will mark a full percentage point lopped off the federal funds rate since September.
While that’s a considerable amount of easing in a short period of time, Fed officials have tools at their disposal to let the markets know that future cuts won’t come so easily.
One of those tools is the dot-plot matrix of individual members’ expectations for rates over the next few years. That will be updated Wednesday along with the rest of the Summary of Economic Projections that will include informal outlooks for inflation, unemployment and gross domestic product.
Another is the use of guidance in the post-meeting statement to indicate where the committee sees policy headed. Finally, Powell can use his news conference to provide further clues.
It’s the Powell parley with the media that markets will be watching most closely, followed by the dot plot. Powell recently said the Fed “can afford to be a little more cautious” about how quickly it eases amid what he characterized as a “strong” economy.
“We’ll see them leaning into the direction of travel, to begin the process of moving up their inflation forecast,” said Vincent Reinhardt, BNY Mellon chief economist and former director of the Division of Monetary Affairs at the Fed, where he served 24 years. “The dots [will] drift up a little bit, and [there will be] a big preoccupation at the press conference with the idea of skipping meetings. So it’ll turn out to be a hawkish cut in that regard.”
What about Trump?
Powell is almost certain to be asked about how policy might position in regard to fiscal policy under President-elect Donald Trump.
Thus far, the chair and his colleagues have brushed aside questions about the impact Trump’s initiatives could have on monetary policy, citing uncertainty over what is just talk now and what will become reality later. Some economists think the incoming president’s plans for aggressive tariffs, tax cuts and mass deportations could aggravate inflation even more.
“Obviously the Fed’s in a bind,” Reinhart said. “We used to call it the trapeze artist problem. If you’re a trapeze artist, you don’t leave your platform to swing out until you’re sure your partner is swung out. For the central bank, they can’t really change their forecast in response to what they believe will happen in the political economy until they’re pretty sure there’ll be those changes in the political economy.”
“A big preoccupation at the press conference is going to the idea of skipping meetings,” he added. “So it’ll turn out to be, I think, a hawkish easing in that regard. As [Trump’s] policies are actually put in place, then they may move the forecast by more.”
Other actions on tap
Most Wall Street forecasters see Fed officials raising their expectations for inflation and reducing the expectations for rate cuts in 2025.
When the dot plot was last updated in September, officials indicated the equivalent of four quarter-point cuts next year. Markets already have lowered their own expectations for easing, with an expected path of two cuts in 2025 following the move this week, according to the CME Group’s FedWatch measure.
The outlook also is for the Fed to skip the January meeting. Wall Street is expecting little to no change in the post-meeting statement.
Officials also are likely to raise their estimate for the “neutral” rate of interest that neither boosts nor restricts growth. That level had been around 2.5% for years — a 2% inflation rate plus 0.5% at the “natural” level of interest — but has crept up in recent months and could cross 3% at this week’s update.
Finally, the committee may adjust the interest it pays on its overnight repo operations by 0.05 percentage point in response to the fed funds rate drifting to near the bottom of its target range. The “ON RPP” rate acts as a floor for the funds rate and is currently at 4.55% while the effective funds rate is 4.58%. Minutes from the November FOMC meeting indicated officials were considering a “technical adjustment” to the rate.
A briefcase filled with Iranian rial banknotes sits on display at a currency exchange market on Ferdowsi street in Tehran, Iran, on Saturday, Jan. 6, 2018.
Ali Mohammadi | Bloomberg | Getty Images
Iran is confronting its worst set of crises in years, facing a spiraling economy along with a series of unprecedented geopolitical and military blows to its power in the Middle East.
Over the weekend, Iran’s currency, the rial, hit a record low of 756,000 to the dollar, according to Reuters. Since September, the embattled currency has suffered the ripple effects of devastating hits to Iran’s proxies, including Lebanon’s Hezbollah and Palestinian militant group Hamas, as well as the November election of Donald Trump to the U.S. presidency.
With the fall of Syrian President Bashar al-Assad amid a shock offensive by rebel groups, Tehran lost its most important ally in the Middle East. Assad, who is accused of war crimes against his own people, fled to Russia and left a highly fractured country behind him.
“The fall of Assad has existential implications for the Islamic Republic,” Behnam ben Taleblu, a senior fellow at the Foundation for Defense of Democracies in Washington, told CNBC. “Lest we forget, the regime ahs spent well over a decade in treasure, blood, and reputation to save a regime which ultimately folded in less than two weeks.”
The currency’s fall exposes the extent of the hardship faced by ordinary Iranians, who struggle to afford everyday goods and suffer high inflation and unemployment after years of heavy Western sanctions compounded by domestic corruption and economic mismanagement.
Trump has pledged to take a hard line on Iran and will be re-entering the White House roughly six years after unilaterally pulling the U.S. out of the Iranian nuclear deal and re-imposing sweeping sanctions on the country.
Iranian President Masoud Pezeshkian has expressed his government’s willingness to negotiate and revive the deal, officially known as the Joint Comprehensive Plan of Action, which lifted some sanctions on Iran in exchange for curbs to its nuclear program. But the attempted outreach comes at a time when the International Atomic Energy Agency says Tehran is enriching uranium at record levels, reaching 60% purity — a short technical step from the weapons-grade purity level of 90%.