♪ > Welcome to This Week In South Carolina, I'm Gavin Jackson.

Gas and diesel prices are hitting new highs, mortgage rates are up, and the Federal Reserve has increased rates as it continues to battle inflation.

I talked with Doctor Joey Von Nessen, a research economist with the University of South Carolina, about the impacts of all this on our state.

But first, I talk with Winthrop University Political Science Professor Doctor Scott Huffmon about the upcoming midterms just over six weeks from now.

I opened by asking him about his outlook for November 3rd, especially with different polling numbers flying around showing competitive statewide races.

> Well, it'll likely be a boost for Democrats.

Whether or not it's enough to eat into the kind of natural lead among likely voters in South Carolina is a different question.

For the most part, that's a pretty safe lead.

If you go in with about a ten point advantage, which a generic Republican has over a generic Democrat, then you can lose a bit of that and still be ahead.

That said, you know, we see in the Senate race, Darline Graham has agreed to do a debate.

And often, you know, if you think you're, very far ahead, there's no need to necessarily do that.

So, you know, I'm not sure what internal polling they're seeing, if it's a little closer than they would like.

In general, how fired up voters are about affordability will help Democrats in the state.

It's really not incredibly likely to change an outcome.

That said, it's not beyond the realm of possibility.

Gavin> Yeah, again, a lot of factors in play right now.

But what do you make of these polls we're talking about especially from candidates like Democrat Doctor Annie Andrews showing the race tightening.

Especially when I've talked about this before.

But remembering back to 2020, when we saw similar polls showing it being a dead heat between Senator Lindsey Graham and Democrat Jaime Harrison back in 2020.

What do you make of these current polls that we see coming out as a pollster yourself?

Dr.

Huffmon> Well, you know, when an internal entity releases polls, a party, a campaign, you know they've done 20 and they're choosing to release one.

You know, that is probably the poll that they look the best in.

It's not that they're manipulating the numbers and I don't believe that.

I don't believe a legitimate pollster would.

It's that this poll has made them look the best.

This poll is the one they hope is true.

And this poll is the one that could probably help them with a fundraiser so that they can say, "Hey, we're within striking distance, we just need your extra 100 dollars."

So, you know, I don't think it's fair when people accuse the campaigns of putting out completely fake polls, that's not true at all in general.

That said, polls that show this race neck and neck, are probably gonna be the outliers.

And that comes down to measuring who a likely voter is.

You can have a perfectly sampled poll, but if you haven't done a great job at controlling who makes it through your likely voter screen, then your poll's gonna be off, and that could come into play as well.

Gavin> You know, we have seen Doctor Andrews out there campaigning.

She's been raising millions of dollars.

She's up with TV ads and getting earned media.

I think she's even in DC today, doing some more fundraising.

But then it's somewhat of a different story from what we're seeing with another Democrat running statewide, which is Representative Jermaine Johnson, who's the nominee for governor.

He's been holding smaller grassroots events, but I've really not seen too many media advisories for these events, which is kind of interesting.

Think that you want that earned media.

He has raised 750,000 dollars as of July, has about 172,000 dollars on hand, and I don't have any new numbers to contrast that with.

But, at the same time, we have seen Attorney General Alan Wilson, the Republican in this race, he raised 5 million dollars throughout the cycle so far and had about 1 million dollars on hand in the summer.

Of course, they had a more contentious primary.

But what do you still make of Johnson's approach to this, and also what needs to be done if he wants to really have a shot at going up against Alan Wilson here in November?

Dr.

Huffmon> Well, you know, the Alan Wilson machine is well-oiled.

Their experience, they've run statewide races before.

If you want to go up against a campaign like that, in a state that already leans towards his party, then you've got to make sure you are in a position to catch the wave of voter discontent.

And even though, you know, catching that wave means you still would have some ground to make up.

The only way that you're gonna be able to ride the wave of anger about affordability, anger about foreign entanglements, is to make sure you're out there.

And again, as you pointed out, earned media is a great way to do that, when your fundraising numbers pale in comparison to your opponent.

So, you know, getting out there, getting the message out to independent voters, and there are some that still exist in South Carolina, and trying to get them to the polls.

That's gonna be a primary strategy.

And even then, under the best circumstances, if you caught that wave better than any surfer possibly could, it's still gonna be difficult to ride it to victory in South Carolina in 2026.

Gavin> Right.

So you're talking about not just, you know, getting the Democrats turned out as well, but those key independents, which, I mean, how do you describe the independent vote in South Carolina?

How key is it?

I mean, how much of a factor is it as well?

Dr.

Huffmon> It's a very small factor.

You know, a lot of people like to say, "Oh, well, you know, 30 or so percent of the electorate's independent."

No, 30 to 33 percent say, "I'm an independent."

But when you follow that up with, "Do you lean more towards the Democratic Party, more towards the Republican Party or towards neither?"

Turns out, only about 10 percent of South Carolinians in the general population are actual independents.

Now, that number has probably gone up because anger at parties has gone up, even within both parties.

You know, there are people that say, "I'll never vote anything but Republican or but Democrat.

However, I'm angry at the party."

So anger with parties has probably driven that up.

But in general, you're gonna have low two digits at best when you're talking about independents, and they are also the least likely to turn out.

So you have got to find a way to grab their attention because they're just as affected by the economy, affordability, all of these things as anyone else.

But they're not always as tuned in to politics as the hardcore partisans.

And you, as a candidate, have to change that.

Gavin> Gotcha.

That's a good point there, Scott, when we're talking about, you know, there's hardcore party factions too, it's been interesting to see what's going on with the Republicans, of course, we had that special primary in August, because of the passing of Senator Lindsey Graham in July really threw things, a major curveball, of course, because then we're in August with that runoff that Senator Darline Graham, decisively, closely, I should say, as well, over Congressman Ralph Norman.

But that pushed into August, right?

When we're talking about trying to unify the party, especially when you're talking about Norman, who was still telling folks to vote for him earlier this month, something that he backtracked on.

But, something that there's still very much a movement on social media, it seems like, that could affect Senator Graham's vote count when it comes to November.

What do you make of that?

Do you think that's still just people maybe licking their wounds, being a little angry about what happened in August, or do you think people are actually gonna write in Ralph, or do you think that they're going to maybe stay home?

How do you factor that in?

Dr.

Huffmon> There are definitely gonna be people who write in Ralph Norman's name.

You know, again, somebody decided to, you know, make the website or the social media post or whatever they are.

The question is, is it enough to actually change the outcome of the election?

So you have multiple factors coming together.

You know, we talked about, you know, kind of the unknown, factor of Darline Graham, the affordability questions, things like that.

And if we have this right, in factor, could that work strongly against Darline Graham?

Well, if this were Strom Thurmond in 1954.

Yes.

But that's not what's going on here.

There's not gonna be an overwhelming movement to replace, you know, Darline Graham, when it comes to getting a conservative into the Senate.

Will it show up?

Of course, it'll show up, as a blip, but a hardcore conservative who thinks Darline Graham and her brother were not conservative enough, are unlikely to do something that would make it easier for the Democrat to win.

So they're unlikely to stay home because they're gonna have the President ringing the alarm bell.

"Republicans need to show up, the Democrats are gonna cheat."

And when they show up, they're unlikely to do anything to help the Democratic side.

Yeah, we can talk about his messaging in a moment.

But I want to talk about SC 01, that first Congressional District race, that's wide open.

Democrats need to gain three seats to take over the House and the first Congressional District was redistrict, redistricted and upheld by the US Supreme Court that made it more Republican again.

Congresswoman Nancy Mace won that seat by 16 points in 2024 against Democrat Michael B. Moore, but neither of them are on the ticket this year.

Instead, Republican Charleston County Councilwoman Jenny Costa Honeycutt and former Chief of the Navy Reserve Democrat Nancy Lacore are squaring off.

So the race has been significant in ways that it's gotten a lot of national interest, especially due to Lacore's national story of being unceremoniously fired by DoD Secretary Pete Hegseth after some 35 years in the military.

But Cook Political Report moved this race from solid Republican to likely Republican in June.

It's not a lean or toss up, but just likely Republican.

So what do you make of this right now, Scott?

Do you think that's something that could be flipped by the Democrats?

What's your read on the SC 01?

> Well, it's more likely to be able to be flipped by Democrats than any of the other districts in South Carolina at this point.

You know, even when it was not that safe, once the redistricting, once the court, you know, set the boundaries, as you mentioned, even when it was the least safe seat, Nancy Mace was still winning it by, as you pointed out, 16, in the previous cycle, 17 points.

So it was still a strong Republican seat.

But this is now an open seat.

It's a time when both parties, but especially the Democrats, are nationally hammering away at, you know, we need to take Congress back.

You have a Democratic candidate who has a story that resonates with Democrats, Democratic leaning folks and independents who are upset at the way the administration's been behaving, but also the way institutions in general.

Parties, Department of Defense, the presidency, the courts, all of it.

So that puts this more in the realm of reachable than certainly any of our other districts.

It's still very likely to go Republican, but the likely is not absolute.

And we just have a couple of minutes left, Scott.

But we did see, you know, over in the Senate, the Democrats do need to flip four seats to take control.

We've seen the president's super PAC, MAGA Inc., has been reserving ad time.

It's planning to spend some 400 million dollars in key battleground races.

What do you make of this move now?

Is it too late to change the narrative?

We're seeing the President was in North Carolina this week talking to folks.

Obviously, there's a big Senate race up there.

Will people just be voting with their wallets?

Is it kind of already baked in right now, where folks are at this point?

Dr.

Huffmon> You know, for the most part, barring any massive change, yes, people are gonna be voting somewhat with their wallet.

A lot of folks, especially if they're not used to turning up into the lower turnout elections, what the midterm is, tend to be retrospective voters.

They show up because they're looking back and they're angry about it.

And who they blame tends to be the party in power.

And that right now is the Republicans.

The question about whether or not the Senate flips, look, only a third of them are up for reelection.

And at any given election that map may favor the Republicans or favor the Democrats.

The Senate was thought to be completely out of play.

The fact that people are looking at it again and saying, "It may be in play," tells you a lot about how angry regular voters are.

Not the hyper partisans, who are always angry, but the average voter is pretty angry, and that puts the Senate in play in a way we didn't think it would be.

Gavin> And wrapping up, Scott, looking ahead to 2028 which we'll be doing November 4th, of course, the day after Election day.

That will be the beginning start of this race of course, for president 2028.

But our primary for the Democrats will be on January 22nd, 2028.

The Republicans just secured the first in the South primary, which is the usual position for them.

But the race will be wide open on both sides, and we're already seeing potential candidates come through.

How do you see this position, which again, reaffirms the 2024 Dem calendar, changing the dynamic for South Carolina voters?

Obviously, this is a different race than 2024.

It's gonna be wide open again and South Carolina will be first for the Democrats.

So what will this mean for them?

How do you think this will change things for 2028 and for the Democrats in the state?

Dr.

Huffmon> Well, you know, I don't expect, you know, Jim Clyburn to play kingmaker again.

He always can.

But we are so important for both parties.

We're the first test for the Democrats, for a multiracial coalition, which they need in order to win the presidency.

You don't get that in an Iowa caucus or a New Hampshire primary.

For Republicans, we're the first test of the kind of conservative who can sweep the South.

If you sweep the South in the presidential race, you need less than 30 percent of all other electoral college votes in the entire country.

So South Carolina is actually a great test for both parties for who a good candidate's gonna be.

And this reaffirms the fact that South Carolina is a great testing ground for both parties.

Gavin> Joining me now is Doctor Joey Von Nessen, a research economist at the University of South Carolina, Darla Moore School of Business.

Joey, welcome back.

Good to see you as always.

Dr.

Von Nessen> Thank you, Gavin.

Likewise.

> So Joey, we have a lot of economic news to discuss.

And you're always our go to guy on this.

So let's just go ahead and start off with the Federal Open Market Committee's meeting this week, that increased interest rates by 0.25 percent.

Why did this need to be done?

> Well, we are seeing a resurgence of inflation in 2026, number one, due to energy costs.

And that is impacting most economic sectors across the board.

And secondly, we have been in a period of high inflation for several years.

We have not gotten back to the Federal Reserve's target of 2.0 percent inflation.

We're about a 3.5 percent inflation now, as our current inflation rate at the US level.

So there are multiple factors that are driving the Fed to look at raising interest rates to get inflation down.

And another reason why they're able to act in September of this year is because the job market has held up fairly well in 2026, and so it gives them a bit more wiggle room, more of a cushion to raise rates without as much of a concern about increasing unemployment.

Gavin> Right.

Cause that's always kinda like the flip side to that too, is the cooling of the labor market.

But it seems like everything's going pretty well there.

And we'll jump to the labor market in a moment, but I just wanna ask you just about, the fact that there's two more meetings for the Fed, in October and December, and it sounds like there could be another rate hike or two.

And like you mentioned, inflation is running at 3.4, 3.5 percent, right now.

So it's safe to assume, that we probably even see that tick up next month when we get the CPI report, just because of how energy costs are increasing right now with diesel and gasoline.

And those are big drivers of CPI.

So how concerned are you about economic growth with all this happening, including that stubborn inflation?

Dr.

Von Nessen> Well, it definitely will have an effect as we look towards the rest of 2026, if inflation does not begin to come back down because the key point here is that when we look at inflation at 3.4 percent, that's now higher than the pace of wage growth that we're seeing.

In other words, prices are now rising faster than wages.

That began this summer and it's the first time that's happened since 2023.

And so what that means from a practical perspective is that consumers are once again losing purchasing power.

And if that trend continues, then that makes it more likely that consumers could pull back on spending, which could in turn slow the economy, as we head towards the end of the year.

So that's really the concern, and that's the concern that the Fed has as well.

Gavin> Right.

So you're talking about the consumer economy, which drives the economy.

And we did see those retail sales jump in August, about 1.2 percent month over month.

And that was the most in five months.

But it also followed a revised 0.5 percent decline in July, which was the first decline since October.

Again, the biggest driver here of all this was gas stations for the consumer.

So people were spending at gas stations.

So, how surprised are you about that resiliency when it comes to retail, but also concerned about that July number, obviously August is maybe a bit more back to school driven.

But you know, this is all in the context of the affordability crisis that continues, especially with these high prices all over the place.

Dr.

Von Nessen> Exactly.

And we look at it more from a trend perspective rather than these month over month changes, cause like you mentioned, these data can be revised.

But if we look over the long term, what we really see is that consumer spending has remained positive, but it's growing at a slower rate in 2026 than what we've seen in the last couple of years, as we've seen inflation tick back up.

And so the real question is, will that growth rate continue to slow as we move towards 2027.

Or will it stay at it's fairly, at its current rate.

If it does, then we can continue to see growth moving forward.

So the real trick is to get inflation under control before we see any further pullback in consumer spending, because right now at the end of the day, the consumer is still spending.

South Carolina's economy is still doing fairly well.

And the key is to get inflation under control before that changes.

Gavin> But Joey, when you look at those gas prices, you look at diesel heading 6.15 and of course diesel is the backbone of transportation and agriculture and so much in our country.

I mean, we haven't felt the reverberations of all that coming down now yet, either into our wallets or into stock portfolios.

When these companies, which are having pretty good years with their earnings, you know, we might start seeing some revisions.

We had a pretty rough market day this week on Wednesday.

But, are you concerned that we will see energy costs maybe sabotage this growth?

Dr.

Von Nessen> Well, it depends on how long these energy prices stay elevated.

And the other factor with energy prices is they are very volatile.

As we all see at the gas station, prices are up and prices are down.

The problem with diesel costs going up is that when you look at shipping and agriculture and business transportation, they typically rely more on diesel than they do on gasoline.

So that can have a bigger impact on transportation costs.

But, when you look at gasoline costs and oil prices, they have fluctuated quite a bit.

So oil prices, for example, started out in 2026 at about 60 dollars per barrel, it peaked at about 120 dollars per barrel.

It's now about 105 dollars per barrel.

So there's really been a lot of variation there.

So the extent to which it this ultimately impacts consumers in the form of raising transportation costs for businesses and those costs getting passed on, just depends on how volatile these energy prices are and whether they stay elevated or begin to taper off.

The Federal Reserve Bank of New York said that "Americans are carrying about 1.26 trillion dollars in credit card debt."

We're talking about the resilient consumer well, they're spending still, too.

And some of them aren't able to actually meet their balances.

Of course, 13 percent of card balances are 90 days past due.

So there's a lot of delinquency going on there as well as people continue to charge their way through this economy.

So is that what's happening right now?

Are we just kind of charging our way through the economy?

How concerning is consumer debt to you, as well as America's own growing debt?

Where Americans like that, and so is the economy itself.

But that America's debt at 40 trillion dollars, a new record, Joey.

So when we talk about all this debt, what does that mean for the economy?

> Well, in the short run, if we look at consumer debt that has been ticking up, it's still at a fairly, healthy level, healthy from the perspective of not being in a position where it's gonna lead to any major pullback yet or no major, we're not at a... we don't see any red flags just yet, although it has been ticking up.

Savings rates are a bit lower as well.

So consumers are spending a lot more than they're saving.

And the other factor that's really been propping up consumer spending is, what I call "the wealth effect," which is the result of a booming stock market.

So that's also generating a lot of income and helping some Americans continue to spend as well.

So there are a lot of factors at play.

But again, as long as inflation remains above, or the rate of price increases remains above the rate of wage growth, then we are in a more precarious position as we look forward,.

In terms of long term debt, a bit of a separate issue there.

That doesn't affect our outlook for 2027, but we can talk about debt and how that could be resolved in the long run.

But that's more of a long run, A long-run forecast in terms of how it could influence what the outlook is, but not so much for 2027.

Gavin> Joey, you mentioned that the stock market is humming pretty well.

I'm sure that's good news for all of the retirees watching right now.

And good for them for making their money in the stock market as they are.

But again, the stock market isn't the economy.

So do you think there's a disconnect between folks who are making it work right now, who are benefiting from a lot of this volatility in some ways, and also this steady growth versus some other folks who are, again, really sounding the alarm when it comes to the affordability crisis.

Dr.

Von Nessen> Yes, and we can see that when we look at where this spending is coming from.

So again, we talk about a, we talk about consumer spending that has been fairly stable and resilient.

But when you break that down and look at the types of households that are able to spend the growth in consumer spending is primarily coming from the top 30 percent of American households, and those are the ones that are largely invested in the stock market and are benefiting and are getting other income sources from a booming stock market.

And that means the remaining 70 percent, really aren't and haven't seen any significant uptick in their spending activity.

And that's because they are more limited by inflation, because they are relying more on that wage income, on that labor income.

And that's where we see prices rising faster than wages having a significant effect.

Gavin> And I want to ask you maybe a couple more questions with two minutes left, when we talk about the labor market also kind of maybe seeing a divide there too.

Obviously our unemployment rate for July was 4.2 percent, which is the fifth consecutive month of decline, which is great in a good way.

But how healthy would you say our labor market is?

Are there two different labor markets with folks who are maybe comfortably employed versus those constantly looking, or maybe those in fear of, you know, advancements in technology taking their jobs.

Dr.

Von Nessen> So we're in what I would call "a low hire, low fire economy," if we zoom out at a 30,000-foot view.

Meaning that we haven't seen any significant uptick in layoff activity overall, but we don't see businesses hiring as much, in part because of the economic uncertainty.

For all the reasons that we've talked about, many companies are really in wait and see mode.

They're not making any major investment or hiring decisions.

And what that boils down to is that for many, again, your mileage may vary, everybody is different.

But in general, if you have a job, you're not any more likely to be laid off today than you were a year ago.

But if you are laid off, then it's gonna be harder for you to find work.

And we do see that the percentage of people who are unemployed, are being unemployed for longer periods of time because they're having trouble finding new jobs.

And that's consistent with slower rates of hiring.

There's also a big divide between white collar and blue collar sectors as well.

So even though at a 30,000-foot view, we see a very strong labor market overall, when you zoom in, as you mentioned, with AI beginning to displace young hires, that's happening primarily in white collar positions and in more office-based positions.

But if you look at high-skilled trades, what we traditionally call blue collar positions, those are still very, very much in high demand, particularly in South Carolina, with health care being at the top of the list.

Gavin> Gotcha.

That's Doctor Joey Von Nessen with the University of South Carolina.

Joey, thanks as always.

Dr.

Von Nessen> My pleasure Gavin, thank you.

You can find this show and more at YouTube.com/@SCETVNews.

For South Carolina ETV, I'm Gavin Jackson, be well South Carolina.

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