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Top economist: 4 key economic metrics that could make or break Biden’s reelection in 2024

By Jake Beardslee · February 10, 2024

Voters' Economic Perceptions Override Data in "Vibecession"

"It's the economy, stupid" was the famous phrase James Carville used to explain Bill Clinton's surprise victory in 1992. The "vibecession" that Joe Biden can't seem to escape suggests that despite his positive economic data, voters feel the economy is struggling.Biden has lowered inflation and kept unemployment low, defying expectations. Mark Zandi says Biden will win reelection if the economy keeps improving, stating "It's about the change in the economy, as much as, if not more than, the level of things," according to Fortune. Voters' perceptions of the economy now seem more aligned with the positive hard data.  The White House/Wikimedia

Gas Prices Have Outsized Influence on Voter Sentiment

Zandi's model predicts Biden will win if things continue as forecasted. Any negative changes to key economic factors would mean Biden loses, as voters would lose faith. Gas prices play an outsized role in perceptions. According to Zandi, "There's nothing that will do more damage, more quickly to the economy, and to Biden's reelection bid than if gasoline prices jump." Gas is hard to substitute. If prices rise over 2% by November, Biden could lose.  The White House/Wikimedia

Mortgage Rates Proxy Housing Affordability for Key Demographic

Mortgage rates are used over home prices as a proxy for affordability. "Buying a house is a major life milestone, and there's a lot of emotions tied into homeownership," says Moody’s director of economic research Brendan La Cerda. If rates surge back to over 8%, Biden would lose. Homeownership means more to first-time buyers, and rate hikes could sway millennials. Zandi expects rates to fall as the Fed cuts interest rates. Trump seems angry about the rate cuts, implicitly confirming they could help Biden.  The White House/Wikimedia

Paycheck Growth Must Outpace Inflation to Buoy Consumer Confidence

To understand incomes, Zandi uses real personal income adjusted for inflation. "People care about the size of their paychecks, relative to the cost of living, because that determines their standard of living," says La Cerda. Moody's expects growth. For Trump to win, incomes would need to fall substantially.Consumer confidence captures perceptions, but its importance is waning due to polarization. Still, continued confidence favors Biden. Perception is reality, but the economy's actual performance will matter most.  The White House/Wikimedia