The upcoming economic developments could significantly impact the outcome of the presidential election, potentially shifting the odds in favor of or against President Joe Biden. Biden’s success in the election hinges on various economic factors such as income growth, inflation, changes in interest rates, and fluctuations in gas prices, especially since the race appears to be closely contested at this point. In the past, it would have taken major economic shifts to sway a presidential election within the final year, as perceptions of the president’s economic management typically solidify by then.
However, given that Biden and Former President Donald Trump are currently neck and neck in both national polls and Electoral College projections, even minor changes could determine the winner. For instance, a spike in gas prices could significantly harm Biden’s chances of reelection.
One well-known election model, spearheaded by Yale professor Ray Fair, relies on just two key variables: GDP growth and inflation. As of the latest projection on April 25, the model shows Biden winning 51.72% of the popular vote. While this might suggest a victory, it does not guarantee success in the Electoral College, where the margins are tighter. In comparison, Biden narrowly defeated Trump in 2020 with a 52.2% popular vote share. Similarly, Hillary Clinton won 51.2% of the popular vote in 2016 but lost the election.
Another more complex election forecast model from Moody’s Analytics takes into account additional economic indicators like gas prices, household income growth, mortgage rates, and consumer confidence to predict the Electoral College outcome. The model predicts a narrow win for Biden, with various scenarios showing how changes in these economic factors could potentially tip the election in Trump’s favor.
Despite some positive economic indicators favoring Biden, such as robust GDP growth and strong job growth, issues like high inflation and interest rates remain significant challenges. Voters are increasingly dissatisfied with Biden’s economic performance, with nearly 60% disapproving of his handling of the economy, according to polls.
