Inflation is easing. Now, Harris has an even bigger problem with the economy.

Federal Reserve policymakers and top economists say the U.S. has turned the corner on inflation. Now, Vice President Kamala Harris has to sell American voters on how she’ll keep the economy afloat through its aftermath.

The labor market is cooling. Banks like JPMorgan Chase and Goldman Sachs are raising their projections for a U.S. recession. More Americans are skipping credit cards and auto loan payments. Delinquency expectations — which reflect the likelihood of a missed minimum payment on outstanding debt — are at the highest levels since the peak of Covid-19 lockdowns .

Those fissures are forming just as a growing number of economic gauges suggest the Fed’s long-running fight against inflation is near its conclusion.

Inflation slowed to its lowest level since early 2021 last month, the Labor Department announced on Wednesday. Prices climbed by an annual rate of 2.9 percent, inching closer to the Fed’s 2 percent target, and price growth in “core” segments of the economy also softened.

The latest data signals that the greatest threat has shifted from price spikes to the overall health of the economy. Bringing down prices remains a priority, but Fed policymakers are increasingly attuned to how two years of high interest rates have affected consumers — particularly those with low or moderate incomes — as well as businesses and the labor market.

“This gives [the Fed] permission to do whatever they need to for the employment side of the mandate,” Jason Furman, a Harvard University professor who previously served as chief economist to President Barack Obama, posted on X after the release of the Consumer Price Index report. If the August jobs number comes in weak — as it did in July — markets will expect the Fed to cut interest rates by as much as half-a-percentage point, twice the usual move by the central bank.

Those shifting dynamics will require an adjustment in how Harris and other Democrats pitch voters on economic policy. For months, the White House and its allies were selling voters on how their policies had helped keep the economy’s foundation intact despite soaring prices and high borrowing costs. Now, just as inflation hits a point where the Fed can consider lowering interest rates, that foundation is showing signs of strain.

“I’m glad I’m not responsible for messaging about the economy,” said Jim Manley, a longtime Democratic strategist and onetime adviser to former Senate Majority Leader Harry Reid (D-Nev.). “You can’t just go out there and tell everyone everything is fine.”

“If you try to jam it, they’re going to balk,” he said.

Harris will instead try to finesse her economic policy message in Raleigh, North Carolina, on Friday, where she’s expected to explain how her administration would reduce costs for middle-class families and address corporate price gouging.

The speech could help solidify her surprising rise in the polls against former President Donald Trump when it comes to the economy. Voters have consistently given President Joe Biden weak marks on economic policy, but they’ve been more forgiving of Harris.

Trump will hold a rally in Asheville, North Carolina, later this afternoon where he’ll attack Harris on the “economic hardships” caused by the Biden administration’s policies, according to his campaign.

He'll be tapping into a well of discontent among voters. Most Americans believe the U.S. is already in a recession — it’s not (or, more accurately, probably not ). High prices still pose a major challenge for many families, particularly with regard to essentials like housing. Even if consumer sentiment adjusts to disinflation , voter perceptions of the economy aren’t dictated by price growth.

As price growth slowed through the first half of this year, the percentage of registered voters who identified inflation as the top issue they’d consider at the ballot box fell from 14 percent to 6 percent , according to NYT/Siena surveys. Larger shares of voters said they cared most about the overall state of the economy — including the labor and stock markets — as opposed to just cost-of-living concerns.

Still, lower inflation could make Harris’ economic messaging “simpler and cleaner,” said Tobin Marcus, a former aide who is now head of U.S. Policy and Politics at Wolfe Research.

Most people will not face layoffs or wage reductions, and “it’s already too late for [an economic] softening around the margins to be a political problem,” he said. Instead, “the benefit of lower rates is more immediate.”

If the Fed cuts rates in September, that could quickly become visible in credit card borrowing costs, rates on new mortgages and other forms of financing. It could free up businesses to expand after two years of holding back due to higher interest rates.

"Inflation has fallen below 3 percent and core inflation has fallen to the lowest level since April 2021," Biden said in a statement on Wednesday. "We have more work to do to lower costs for hardworking Americans, but we are making real progress."