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Vice President Kamala Harris called for the construction of 3 million new housing units, both for rent and for sale, over the next four years.
Other proposals include tax incentives to build more homes and down payment assistance for first-time buyers.

Democratic presidential candidate Vice President Kamala Harris speaks at an Aug. 10 campaign rally in Las Vegas.
Justin Sullivan | Getty Images News | Getty Images

Supply is housing policy’s ‘bipartisan sweet spot’

“The bipartisan sweet spot around the housing affordability challenges that we have today is on increasing supply,” said Dennis Shea, executive director of the Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy.
Ever since the foreclosure crisis, a major period of property seizures in the U.S. between 2007 and 2010, there have been far fewer new single-family homes and multi-family rental buildings under construction, said Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute, a non-profit think tank in Washington, D.C.

There’s “a more acute shortfall” when it comes to affordable homes, she said, whether for renters looking for quality rental units or first-time buyers.

To get to those 3 million new units, a Harris-Walz administration would introduce a “first-ever tax incentive” for homebuilders who sell starter homes to first-time homebuyers, according to the proposals unveiled last week. 
The initiative would complement the Neighborhood Homes Tax Credit, according to the announcement, which would be created by a bill pending in Congress called the Neighborhood Homes Investment Act.
Shea said the tax credit, which “has strong bipartisan support,” would promote the creation and rehabilitation of starter homes for sale in distressed communities.

My conclusion is that [Harris’] housing plan would be worse than doing nothing.

Edward Pinto
senior fellow and codirector of the American Enterprise Institute’s Housing Center

Former President Donald Trump has also talked about ways to increase housing supply as part of his presidential campaign proposals.
“We’re going to open up tracks of federal land for housing construction,” Trump said in an Aug. 15 press conference. “We desperately need housing for people who can’t afford what’s going on now.”
But Edward Pinto, senior fellow and codirector of the American Enterprise Institute’s Housing Center, said it’s “much, much harder” for the government to pass “supply-side proposals,” compared with efforts that generate demand by making homebuying easier for consumers.
“My conclusion is that [Harris’] housing plan would be worse than doing nothing,” he said.

‘It’s hard to define what a starter home is’

It will be important for Harris to clarify what she means by “starter home,” said James Tobin, CEO of the National Association of Home Builders.
“It’s hard to define what a starter home is,” said Tobin, as underlying costs make it hard to keep building expenses low.
“In most markets in the country, it’s hard to build to that first-time home buyer because of labor costs, land costs, borrowing costs for a builder, and then material cost,” he said.

Defining a range of price points for a starter home will also be important, as it may vary widely across different markets, said Tobin.
“In California, a starter home might cost [$700,000] or $800,000, but in the South … it might only be $250,000 or $300,000,” he said.

The $40 billion innovation fund seems ‘very high’

The list of Harris’ proposals also includes a $40 billion innovation fund. The money would empower local governments to fund and support local solutions to build housing.
Yet some experts are skeptical it will fulfill the intended goal.
“The federal government doesn’t have a whole lot of authority over what happens at the local level,” said Redfin’s Fairweather. “It’s up to the local planning commissions whether they’re going to allow for more housing in order to get that [innovation fund] money.”
“But time and time again, locals and local governments, local homeowners ignore incentives because they’re so resistant to building more housing,” Fairweather said.
Additionally, the $40 billion housing innovation fund may be too expensive, making it unlikely to get bipartisan support, Shea said.
“The price tag there seems very high,” he said. “I don’t know if the market could bear that price tag in Congress.”

Aid for first-time homebuyers has less support

Harris proposes to provide $25,000 down-payment assistance to first-time homebuyers who have paid rent on time for two years, with more generous support for qualifying first-generation homeowners.
The proposal stems from an idea the Biden-Harris administration presented earlier this year, which called on Congress to implement $25,000 in down-payment assistance exclusively for 400,000 first-generation buyers, or first-time buyers whose parents weren’t homeowners, and a $10,000 tax credit for first-time buyers.

Harris’ blueprint would apply to all first-time buyers and broaden the reach to more than 4 million qualifying applicants over four years.
But “there’s just not a lot of bipartisan support,” Shea said.
During an Aug. 16 appearance on Fox Business, Sen. Tim Scott, R-S.C., said Harris’ $25,000 down payment assistance “will only make the demand higher with the supply not moving, which means that prices will go up, fewer people are going to be able to afford it.”
“And frankly, unless they’re going to embed financial literacy in any program, it only means there will be a higher level of default,” said Scott.
To help renters, Harris addressed two pending pieces of legislation. She called on Congress to pass the Stop Predatory Investing Act, a bill that calls for removing key tax benefits for those who own 50 or more single-family properties. This initiative would curtail major investors from buying up large sums of single-family rental homes.
Meanwhile, the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act would crack down on companies who use algorithmic systems to fix market rent prices. More

With federal student loan forgiveness up in the air and the rising cost of college now a top concern for families, parents are reprioritizing saving for higher education, recent studies show.
Families are increasingly taking advantage of 529 college savings plans, which have even more benefits as of 2024.
Yet only 30% of parents are on track to reach their savings goals, according to Fidelity.

Kathryn Bracho, 48, with her husband, Michael, and their two sons, Declan and Taran.
Courtesy: Kathryn Bracho

With federal student loan forgiveness in jeopardy and the rising cost of college now a top concern for students and their families, more Americans are prioritizing saving for higher education.
In 2024, 74% of parents surveyed have started putting money away for college, according to Fidelity’s College Savings Indicator — a spike from 58% in 2007, when the study was first conducted. Fidelity polled nearly 2,000 families with children high school age and younger between April and May. 

“My husband and I just kept hearing from people with older kids about just how expensive college is,” said Kathryn Bracho, 48, who lives in Green Bay, Wisconsin.
Bracho and her husband, Michael, started contributing to college savings accounts in 2017 so their sons — Declan, 15, and Taran, 12 — would have options after high school, she said.
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“I don’t know that we have as much as we had hoped, but just the fact that we’ve been steadily contributing gives me a certain degree of reassurance,” she said. “They’ll have to take out some loans but it hopefully won’t be that crushing burden.”
To be sure, sky-high costs and concerns over ballooning student loan balances have weighed heavily on considerations about college for students and their parents.

“Families are beginning to row together in the same direction and realize the value of higher education and what they want to get out of higher education,” said Chris McGee, chair of the College Savings Foundation, a nonprofit that provides public policy support for 529 plans.
“Nobody wants to be part of the $1.7 trillion,” McGee said, referencing the total amount of outstanding student loan debt.

How savings plays into covering college costs

David Ochs, a physician in Richmond, Virginia, owed $315,000 in education loans by the time he finished his residency. “It’s been miserable,” the 39-year-old said.
Now as the father of two sons, ages 1 and 5, Ochs said he started saving for their college educations soon after they were born because he didn’t want them to experience the same hardship. “All of a sudden your life is all about trying to get out of a strangling debt.”
Still, contributing to their 529 plans has necessitated sacrifices such as forgoing extra payments toward his student loans, he added. “I think it’s a gesture of love.”

Among the 94% of parents funding their children’s higher education, almost half say that savings is their primary way of paying the tab, a new report by the College Savings Foundation found. The annual State of Higher Ed Savings survey polled more than 1,000 parents of children age 25 and younger in July. 
For the first time in the College Savings Foundation survey’s history, more than half of all parents said they are tapping a 529 college savings plan.
In 2024, total investments in 529s jumped to $450.5 billion in June, up nearly 10% from $412.5 billion the year before, according to data from the College Savings Plans Network, a network of state-administered college savings programs.

Financial experts and plan investors agree that 529 plans are a smart choice for many. And yet, in previous years, data shows that regular contributions to a 529 college savings plan often took a back seat to paying more pressing bills or daily expenses.
Even now, parents hope to use savings to pay for 67% of their child’s education, but only 30% are on track to hit that goal, Fidelity found.
“A college education is still valuable, but it’s the lack of planning that’s a little bit alarming,” said Tony Durkan, a vice president and head of 529 relationship management at Fidelity Investments.

The benefits of a 529 college savings plan

Among other recent changes, higher contribution limits and the flexibility to roll unused money into a Roth individual retirement account free of income tax or tax penalties have helped boost interest, McGee said.
The restrictions around 529s have also loosened to include continuing education classes, apprenticeship programs and even student loan payments.
“The legislative updates that have come through have certainly broken down barriers to entry to 529 plans,” Fidelity’s Durkan said.
Here’s a closer look at some of the changes:
New Roth IRA rollover rules
Thanks to Secure 2.0, as of 2024, families can roll over unused 529 plan funds to the account beneficiary’s Roth IRA without triggering income taxes or penalties. Among other qualifications, the 529 plan must have been open for at least 15 years.
That change follows the Secure Act of 2019, which let 529 users put some of the funds toward their student loan tab: up to $10,000 per year for each plan beneficiary, as well as another $10,000 for each of the beneficiary’s siblings.
Previously, tax-advantaged withdrawals were limited to qualified education expenses, such as tuition, fees, books, and room and board. Now, 529s offer much more flexibility, even for those who never go to college, Chris Lynch, president of tuition financing at TIAA, told CNBC last year.
In that case, you could transfer the funds to another beneficiary or withdraw them and pay taxes and a penalty on the earnings. If your student earns a scholarship, you can typically withdraw up to the amount of the scholarship penalty-free.
Higher maximum contribution limits
This year, parents can gift up to $18,000, or up to $36,000 if you’re married and file taxes jointly, per child without those contributions counting toward your lifetime gift tax exemption. That’s up from $17,000 and $34,000 for married couples filing jointly in 2023. 
High-net-worth families that want to help fund a family member’s higher education could also consider “superfunding” 529 accounts, which allows front-loading five years’ worth of tax-free gifts into a 529 plan.
In this case, you could contribute up to $90,000 this year, or $180,000 for a married couple. But then you wouldn’t be able to give more money to that same recipient within a five-year period without it counting against your lifetime gift tax exemption.
A larger lump-sum contribution upfront may potentially generate more earnings compared with the same-size contribution spread out over a few years because it has a longer time horizon, according to Fidelity.
New grandparent ‘loophole’
A new simplified Free Application for Federal Student Aid rolled out at the end of last year, with added benefits for grandparents who own 529 accounts for their grandchildren.
Under the old FAFSA rules, assets held in grandparent-owned 529 college savings plans were not reported on the FAFSA form, but distributions from those accounts counted as untaxed student income, which could reduce aid by up to half of that income.
As part of the FAFSA simplification, students no longer have to answer questions about contributions from a grandparent, effectively creating a “loophole” for grandparents to save for a grandchild’s college without impacting their financial aid eligibility.
Tax deductions or credits for contributions
Even before recent changes, there were already many advantages to a 529 plan. In more than half of all U.S. states, you can get a tax deduction or credit for contributions. Earnings grow on a tax-advantaged basis, and when you withdraw the money, it is tax-free if the funds are used for qualified education expenses.
A few states also offer additional benefits, such as scholarships or matching grants, to their residents if they invest in their home state’s 529 plan.

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As former President Donald Trump and Vice President Kamala Harris unveil their economic agendas, both candidates have called for tax changes that could affect millions of Americans.
The next president will face trillions in expiring tax breaks enacted by Trump via the Tax Cuts and Jobs Act of 2017.
Both candidates have proposed tax cuts and increases that require congressional approval.

Vice President Kamala Harris, left, and former President Donald Trump

As former President Donald Trump and Vice President Kamala Harris unveil their economic agendas, both presidential candidates have called for tax changes that could affect millions of Americans.
Taxes will be a key issue for the next president. Without action from Congress, trillions in tax breaks enacted by Trump via the Tax Cuts and Jobs Act, or TCJA, will expire after 2025. More than 60% of taxpayers could see higher taxes in 2026 without extensions, according to the Tax Foundation.

Expiring provisions include lower federal income tax brackets, a higher standard deduction, a bigger child tax credit and more generous estate and gift tax exemptions, among others.
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However, “there’s a gulf between the political rhetoric around the 2017 tax law and the policy reality that both parties are going to face next year,” said Andrew Lautz, associate director for the Bipartisan Policy Center’s economic policy program.
While Democrats have criticized elements of the TCJA, both parties will likely agree to extend trillions in tax cuts, he said. But negotiations could be challenging amid concerns about the federal budget deficit. 
Extending TCJA provisions and subsidized premiums for marketplace health insurance could increase federal deficits by nearly $5 trillion over 10 years, according to the Bipartisan Policy Center.

Here’s a breakdown of where each candidate stands on tax policy.

Plans to extend Trump’s tax cuts

Trump aims to preserve the individual and business tax cuts enacted via TCJA, the campaign said in a press release on Monday.
He addressed his tax agenda briefly during an event in York, Pennsylvania, on Monday, which countered the Democratic National Convention. During that speech, he promised “big tax cuts for families and small businesses.”
Harris hasn’t directly addressed TCJA extensions during her 2024 campaign. But President Joe Biden’s top economic advisor, Lael Brainard, in May voiced support for partial extensions.
“Achieving a fairer tax system also means we can’t extend expiring Trump tax cuts for those with incomes above $400,000,” Brainard said.
The Trump and Harris campaigns did not respond to CNBC’s request for comment.

Proposed tax increases

Both candidates have vowed to address the budget deficit and have proposed measures to raise revenue. But tax law changes must be approved by Congress, which could be challenging, depending on future House and Senate control.
The Harris campaign on Monday said she would push to increase the corporate tax rate to 28%, up from the 21% permanently enacted via the TCJA. The plan could reduce the deficit by $1 trillion over a decade, according to estimates from the Committee for a Responsible Federal Budget.
Meanwhile, Trump has called for sweeping tariffs, which are taxes levied on imported goods.
Trump’s proposed baseline 10% tariff and 60% levy on Chinese goods could reduce the average after-tax U.S. household income by roughly $1,800 in 2025, according to the Tax Policy Center.
During his event Monday, Trump pushed back on the assertion that tariffs would cost American consumers. “It’s a tax on a foreign country,” he said.

Tax cuts on tips, Social Security

Both campaigns have also floated eliminating income tax on tip income, pitching the idea at separate events in Nevada, a battleground state and service industry hotbed. Harris announced her plan Aug. 10, roughly two months after Trump introduced his.
Despite some bipartisan support in Congress, the idea has faced criticism from some policy experts who believe the measure could face administrative hurdles and possible abuse.

The big question for us as policy wonks is, what is the underlying policy rationale?

Garrett Watson
Senior policy analyst and modeling manager at the Tax Foundation

“The big question for us as policy wonks is, what is the underlying policy rationale?” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
Trump has also called for no taxes on Social Security income. Social Security is a key issue for voters this election, according to a CNBC poll. CNBC surveyed 1,001 registered voters July 31-Aug. 4.

Child tax credit expansion

Harris on Friday announced an economic plan, including an expanded child tax credit worth up to $6,000 in total tax relief for families with newborn children, among other priorities.
Her plan came less than one week after Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, floated a $5,000 child tax credit. 
A Trump campaign official told CNBC at the time: “Trump will consider a significant expansion of the child tax credit that applies to American families.” More

Tax credits under the Inflation Reduction Act have led to a boom in new manufacturing projects in the U.S.
GOP congressional districts and rural communities have benefited in particular.
The presidential election is creating uncertainty about the future of those projects, with some investors worried a Republican victory could weaken the IRA.

Monica Muñoz, top, and Denise Denning place black encapsulation material on solar panels at Elin Energys solar panel manufacturing facility on Thursday, April 25, 2024 in Brookshire. 
Brett Coomer | Hearst Newspapers | Getty Images

The Inflation Reduction Act has sparked a manufacturing boom across the U.S., mobilizing tens of billions of dollars of investment, particularly in rural communities in need of economic development.
The future of those investments could hinge on the outcome of the U.S. presidential election. The prospect of a Republican victory has shaken the confidence of some investors who worry the IRA could be weakened or in a worst-case scenario repealed.

Companies have announced $133 billion of investments in clean energy technology and electric vehicle manufacturing since President Joe Biden signed the IRA into law in August 2022, according to data from the Massachusetts Institute of Technology and the Rhodium Group.
Actual manufacturing investment has totaled $89 billion, an increase of 305% compared to the two years prior to the IRA, according to MIT and Rhodium. Overall, the IRA has leveraged half a trillion dollars of investment across the manufacturing, energy and retail sectors, according to the data.
“It is having a transformative effect within the manufacturing sector,” said Trevor Houser, a partner with the Rhodium Group. “The amount of new manufacturing activity that we’re seeing right now is unprecedented in recent history, and is in large part due to new clean energy manufacturing facilities.”
Some 271 manufacturing projects for clean energy tech and electric vehicles have been announced since the IRA passed, which will create more than 100,000 jobs if they are all completed, according to the advocacy group E2, a partner of the National Resources Defense Council. The investments sparked by the IRA have been a boon for rural communities in particular, Houser said.
“Unlike investment in AI and tech and finance, which is clustered in big cities, clean energy investment really is concentrated in rural communities, and is one of the brightest sources of new investment in those areas,” Houser said.

The IRA has also accelerated the deployment of renewable energy, with $108 billion in invested in utility-scale solar and battery storage projects. Investments in solar and battery storage have surged 56% and 130%, respectively, over the past two years, according to the Rhodium data.
“The more mature technologies, so like wind and solar generation, electric vehicles, those have achieved escape velocity,” Houser said. “They will continue to grow no matter what. It’s a question of speed.”

Trump threats to IRA

But the “manufacturing renaissance” is still in its early stages and remains fragile, Houser said. Without the IRA, the resurgence of new factories would not have taken off, said Chris Seiple, vice chairman of Wood Mackenzie’s power and renewables group.
Former President Donald Trump has threatened to dismantle the law as he advocates for more oil, gas and coal production.
“Upon taking office, I will impose an immediate moratorium on all new spending grants and giveaways under the Joe Biden mammoth socialist bills like the so-called Inflation Reduction Act,” Trump told supporters at a May rally in Wisconsin.
“We’re going to terminate his green new scam,” he said. “And we’re going to end this war on American energy — we’re going to drill, baby, drill.”

Clean energy stocks tumbled after President Joe Biden’s disastrous debate performance in late June, as investors worried that Trump and the Republicans are poised to sweep both the White House and Congress were growing more likely.
First Solar, the largest panel manufacturer in the U.S., saw growing constraints on access to capital in the second quarter for early stage solar companies as well as larger players that are trying to build out domestic manufacturing, CEO Mark Widmar told analysts on the company’s July 30 earnings call.
Investors are waiting to make decisions until they have a clearer view of what the policy environment will look like for the solar industry, Widmar said. Utilities and oil companies that were making investments in renewables are now considering a pivot to prioritize fossil fuel projects, he said.
The fear among some investors is that Republicans would will use the reconciliation process, through which bills can be passed with a simple majority, to roll back the IRA in order to finance making Trump’s 2017 tax cuts permanent.

Trump told Reuters Monday he would consider ending the $7,500 tax credits for electric vehicles. Consumers and business have spent $157 billion on zero-emission vehicles since 2022, double the amount before the IRA became law, according to Rhodium.
“Tax credits and tax incentives are not generally a very good thing,” the former president told Reuters in an interview when asked specifically about the EV credits after a campaign even in York, Pennsylvania.
Trump has not specifically called out the tax incentives that have supported the expansion of renewables. The former president’s campaign platform says Republicans will support energy production from all sources. The document backs oil, coal and natural gas as well as nuclear, but does not specifically mention solar or wind power.

Republican districts benefit most

Executives at renewable companies and analysts are betting the investment, production and manufacturing tax credits, which are driving much of the spending on clean energy and technology, would survive even a Republican administration.
A majority of IRA investment in new projects, 85%, has gone to GOP congressional districts, according to E2 data. And Trump’s campaign platform emphasizes expanding domestic manufacturing and bringing supply chains back to the U.S.
The dynamics of the presidential race have also changed since Biden ended his re-election bid, with Vice President Kamala Harris rising to a slight lead over Trump national polling averages as she formally accepts her party’s nomination at the Democratic National Convention in Chicago this week.

“We’ve seen an increase in the number of Republican lawmakers that are embracing the clean energy credits within the IRA as they see the positive impact to their states and communities, which is hard to turn away from,” John Ketchum, CEO of NextEra Energy, which operates the largest portfolio of renewable energy, told analysts on the company’s July 24 earnings call.
“And the tax laws are very difficult to overturn,” Ketchum said. “And we’re very likely to have thin margins in the House and the Senate, particularly in light of some of the recent developments,” he said, hinting at Harris’ rise as the new Democratic candidate.
Indeed, 18 Republican members of Congress warned House Speaker Mike Johnson earlier this month that repealing IRA energy tax credits would be bad for business.
“Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing,” the Republican lawmakers wrote.
“A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return,” they wrote.
John Berger, CEO of rooftop solar installer Sunnova, told analysts on the company’s Aug. 1 earnings call the Trump trade that drove clean energy stocks lower might not have much more room to run.
“Clearly, this is a dead heat now,” Berger said of the presidential race. “I think that the old Trump trade and so forth, I would be very cautious on that.” More

Traders work the floor of the New York Stock Exchange on August 16, 2024. 
Angela Weiss | AFP | Getty Images

Stocks @ Night is a daily newsletter delivered after hours, giving you a first look at tomorrow and last look at today. Sign up for free to receive it directly in your inbox.
Here’s what CNBC TV’s producers were watching as stocks rallied Monday and what’s on the radar for the next session.

Gold run

The commodity hit a new high in Monday’s session: $2,549.90.
It is now up 8 out of 9 sessions. Thanks to CNBC data teamer Chris Hayes for the stats and facts.
Gold is up 4.5% in those nine days. Silver is up 8.4% in that same period.
The VanEck Gold Miners ETF (GDX) is up 6.3% in a week and 10% in nine days.

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VanEck Gold Miners ETF performance in 2024

The dollar

The Dollar Index hit its lowest level since Jan. 5 on Monday morning.
A weaker dollar sometimes is good for U.S. exporters as their stuff gets less expensive for overseas buyers.
There are lots of examples of exporters, but Procter & Gamble is one that comes to mind. The stock is up nearly 5% so far in August. The S&P 500 is up about 1.5% in August.

Lowe’s

The home improvement company reports quarterly numbers before the bell.
The stock is up 5% in the past three months.
Lowe’s is up 11% in a year, and the stock is 7.3% from the March high.
Home Depot is also up 5% in three months. The stock has gained nearly 11% in the past year, and it’s 8.5% from the March high.
This is probably not an exact apples-to-apples comparison, but luxury home furnishings company RH is 30% from the September high. Shares are down 23% in a year.

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RH’s performance over the past year

Amer Sports

CNBC TV’s Brandon Gomez will be watching for the numbers before the bell from this sporting goods company. Amer Sports’ brands include Salomon, Atomic, Wilson and Louisville Slugger.
The stock is down about 24% in the past three months. The stock is 32% from the 52-week high hit back in March. Amer, however, is up 12% in a month.
Dick’s Sporting Goods is 3% from the June high. Shares are up 16.5% in three months.
Academy Sports and Outdoors is 27% from the 52-week high hit in March. The stock is up 3% in three months.

Hawaiian Airlines and Alaska Airlines

Texas Instruments

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Texas Instruments’ performance in 2024

Berkshire Hathaway

Jill Schneider on the CNBC Flash Desk pointed out that Berkshire Hathaway B shares hit a new high on Monday.
Berkshire Hathaway B shares are up 26% in 2024, and they are up 4.3% in a week. More

Higher prices have made it more challenging for Americans to stretch their paychecks.
But many households can cover an emergency $400 expense, when combinations of cash, disposable income or short-term credit are considered, new research finds.
Still, cash is 100% the preferred method when paying for unforeseen costs, one expert says.

JGI/Jamie Grill | Blend Images | Getty Images

How people would handle a surprise $400 expense

The Federal Reserve has found 13% of all adults would have been unable to pay for an unexpected $400 expense in 2023.
Yet, JPMorgan Chase Institute finds the share of individuals who are unable to cover such an expense is lower — just 8% — when considering a combination of available cash, disposable income or short-term credit. The share of households that could not weather a $400 emergency expense stayed the same through 2022 and 2023, JPMorgan Chase Institute found.

The research finds a higher level of financial resiliency than what shows up when only considering cash reserves, and notes that access to affordable credit can help.

Most families, 92%, can cover a $400 “expense shock” through a combination of cash savings, disposable income or short-term credit, JPMorgan Chase Institute finds.
That includes 67% of households that can cover the expense using all cash savings; another 20% that can cover it with a combination of cash and disposable income; 3% that can use cash, disposable income and a credit card without incurring interest; and 2% that would use cash, disposable income and a credit card that can be paid off within three months.

Using 100% cash is still the preferred method

But turning to credit to handle even a short-term cash crunch can contribute to long-term debt.
For that reason, financial advisors recommend building a cash cushion against emergencies.
“There’s good debt and … there’s bad debt,” said Ted Jenkin, a certified financial planner and the CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta.
“But to me, almost all debt, maybe with the exception of having a long-term mortgage, is bad debt,” said Jenkin, who is also a member of the CNBC Financial Advisor Council.  

Building an emergency cash reserve, which experts say should be at least three to six months’ of living expenses, can be tough. But there are tips that can help.

Apply the rule of thirds to extra income. Every time you get a pay raise or bonus, one-third of that extra money will go to taxes and one third can go to enjoyment. But the remaining one-third should go to savings, by either paying off credit card debt or building an emergency fund, according to Jenkin. “This is really what will help people never get in trouble,” he said.

Put away extra paychecks. Most people are paid on a bi-weekly schedule, which means in two months of the year, they receive three paychecks. “Bank that third paycheck in your savings account for an emergency reserve,” Jenkin said, which will go a long way to help “normalize” your finances.

Clean out your gift cards. Many people have unused gift cards, which can be turned into cash at sites such as Raise or CardCash, Jenkin said. The exchange likely won’t be dollar for dollar. But trading those unused cards for cash can help you build up your emergency reserves, Jenkin said.

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Although inflation is cooling, up to roughly one-third of families say buying supplies for the new year will put them into debt, recent reports show.
Here are some of back-to-school items with notable year-over-year price changes.

A Target store in Queens, New York.
Lindsey Nicholson | UCG | Universal Images Group | Getty Images

The back-to-school shopping season is in full swing, with the hefty bills to prove it.
Nearly one-third — 31% — of back-to-school shoppers said that buying supplies for the new year will put them into debt, according to a new report by Bankrate, which polled more than 2,300 adults in July.

A separate report by Intuit Credit Karma also found that 31% of parents said they can’t afford back-to-school shopping this year and 34% expect to take on debt to cover the cost of supplies. That survey polled more than 1,000 adults last month.
Higher prices are partly to blame: Families are now paying more for some key back-to-school essentials such as backpacks ahead of the new school year. CNBC used the producer price index — a closely followed measure of inflation — to track how the costs of making certain items typically purchased for students has changed between 2019 and 2024.

On the upside, most families say back-to-school shopping is less of a strain in 2024 compared with a year earlier, Bankrate found.
Overall, inflation continues to retreat. The consumer price index, a key inflation gauge, rose 2.9% in July from a year ago, the U.S. Department of Labor reported. That figure is down from 3% in June and the lowest reading since March 2021.
“Shoppers aren’t clutching their wallets nearly as tightly this year,” said Ted Rossman, Bankrate’s senior industry analyst. “It’s important not to let your guard down, though.”

Back-to-school spending may hit nearly $40 billion

Families with children in elementary through high school plan to spend an average of $874.68 on school supplies, just $15 less than last year’s record of $890.07, according to the National Retail Federation.
Altogether, this year’s back-to-school spending, including for college students, is expected to reach $38.8 billion, the NRF also found. That’s the second-highest tally ever, after last year’s $41.5 billion marked the most expensive back-to-school season to date.
More than 75% of parents said they believe schools ask them to buy too much during back-to-school season, according to a report by WalletHub.

Parents ‘influenced’ to splurge

Despite having to navigate tight budget constraints, 85% of parents said they could be influenced to splurge on a “must-have” item or brand, another survey by Deloitte found. In May, the firm polled more than 1,100 parents who will have at least one child in grades K through 12 this fall.
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According to Casey Lewis, a social media trend expert, low-rise jeans; Adidas Campus sneakers, which cost as much as $110 at adidas.com; and Jester backpacks from North Face, retailing for $75 or more, are topping students’ wish lists this year.
“There’s a lot of pressure to have the right look,” Lewis said. And as trends cycle through faster and faster, “young people have even more pressure to keep up,” she added. “It feels like their popularity and perceived coolness rides on the products they have.”

How to save on back-to-school shopping

Consumer savings expert Andrea Woroch advises families to shop for gently used clothing, sporting goods, school supplies and certified-refurbished electronics on resale sites, use a price-tracking browser extension or app and apply coupon codes. There are a growing number of online retailers that offer children’s product overstock, open-box and returned goods, often at a significant discount.
If you are buying new, try stacking discounts, Woroch recommended, such as combining credit card rewards with store coupons and cash-back offers while leveraging free loyalty programs. For example, you can get 50% off with 2% cash back at Old Navy and 20% off with 1.5% cash back at Office Depot, among other deals.
Otherwise, shop your own stock, Woroch said. “Rip out pages in a partially used notebook, collect scattered markers and crayons to make a full set and clean up last year’s backpack and lunch tote.”

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Minnesota Gov. Tim Walz, Vice President Kamala Harris’ choice as a running mate on the Democratic presidential ticket, may champion a policy of free meals for all K-12 students regardless of family income.
Walz signed a Minnesota state law to create universal free school meals.
Eight states have passed such legislation. Universal free school meals had been available nationwide during the Covid-19 pandemic.
Harris unveiled economic policy proposals Friday aimed to offer financial support related to food and children.

Will & Deni Mcintyre | Corbis Documentary | Getty Images

The idea of offering universal free school meals could become a policy issue in the U.S. presidential race, experts say — especially given Vice President Kamala Harris’ choice of Minnesota Gov. Tim Walz as her running mate on the Democratic ticket.
The federal government offered K-12 students free school meals — regardless of household income — for two years during the Covid-19 pandemic.

That policy has since ended. However, eight states have passed laws to continue offering free meals.
Among them is Minnesota. Walz, a former teacher, signed a bill in 2023 to provide breakfast and lunch to the state’s public school students at no charge, regardless of household income.

“Should Harris and Walz win the election, his role as vice president and his potential influence on universal school meals could be profound,” wrote Alexina Cather, policy director at Wellness in the Schools, an advocacy group for public school nutrition.
Harris, the Democratic presidential nominee, unveiled some details about her economic policy platform Friday.
School meals weren’t among them. But children and food feature in a few proposals: one to restore and enhance the value of a pandemic-era child tax credit, and another to enact the first-ever federal ban on “corporate price-gouging” on food and groceries.

A spokesperson for the Harris campaign didn’t respond to a request for comment.
The federal school lunch program has for decades provided meals for lower-income students. But universal free lunch advocates say it’s essential that free meals be provided for all students.
It helps school districts by reducing administrative burdens and, for students, eliminates “the stigma and shame tied to free and reduced-price meals, creating a level playing field for every child in the cafeteria,” said Alexis Bylander, interim director of child nutrition programs and policy at the Food Research & Action Center, or FRAC.

How the federal school lunch program works

The typical student pays $1.75 or $1.80 for a full-price breakfast at a school cafeteria, varying by grade level, according to the School Nutrition Association. Lunch typically costs $2.83 to $3.05, according to the group. Its data reflects the median price. Prices may be higher or lower based on school district.
The federal government currently subsidizes meal cost for certain students — based on criteria such as annual income — via initiatives such as the National School Lunch Program.
Under the NSLP, students in families with income at or below 130% of the federal poverty line qualify for a free meal.
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A family of three would need to make less than about $34,000 a year to qualify for free meals, according to Bylander.
Those at 130% to 185% of the poverty line are eligible for reduced-price meals. Such students don’t pay more than 30 cents for breakfast or 40 cents for lunch.
On average, about 20 million students — roughly 71% — ate free or reduced price lunches in 2023, according to the U.S. Department of Agriculture.
Former President Donald Trump signed legislation in March 2020 that allowed the U.S. Department of Agriculture to issue nationwide waivers that effectively made meals free for all kids in participating school districts.
That expansion was in place for the 2020-21 and 2021-22 school years.

The “vast majority” — about 90% — of U.S. school districts participated, according to the USDA. Schools were allowed to serve meals or deliver them even if they were closed during the pandemic.
Congress didn’t extend the policy for the 2022-23 school year.
Since then, eight states — California, Colorado, Maine, Massachusetts, Michigan, Minnesota, New Mexico and Vermont — have passed laws to create universal free school meal programs, according to the Hunter College New York City Food Policy Center.
All those states are headed by Democrats, with the exception of Vermont Gov. Phil Scott, who is a Republican.
Many other states are “currently planning, drafting, discussing, or negotiating” such legislation for the “near future,” the Food Policy Center added.
“This isn’t a new idea, but it really picked up speed during the pandemic,” FRAC’s Bylander said. “I think there’s a lot of momentum around this issue.”

Some groups oppose universal free school meals

The policy of offering universal free school meals doesn’t seem to have buy-in across conservative circles.
For example, the blueprint for Project 2025 — a collection of policy plans developed by right-leaning groups and spearheaded by the Heritage Foundation — would “reject efforts” around universal free school meals, according to its text.
Democrats have pointed to Project 2025 as an example of what a second Trump term could look like.
The former president made statements distancing himself from the policy blueprint. But several people who formerly worked for Trump were involved in creating the playbook, and a recently resurfaced video from April 2022 shows Trump speaking at a Heritage Foundation gala about the group’s plans.
While in office, the Trump administration had extended the USDA waivers to offer universal free school meals.
A spokesperson for the Trump campaign didn’t respond to a request for comment.

Project 2025 would also “restore” the National School Lunch Program to its “original goal” of providing food to K-12 students of low-income families who would otherwise forgo a meal, and not include middle and higher earners.
“Federal school meals increasingly resemble entitlement programs that have strayed far from their original objective and represent an example of the ever-expanding federal footprint in local school operations,” according to the text. More