This story at a glance…

1. The economy is a crucial factor in the 2024 election.

2. Inflation challenges both her and Trump’s campaigns.

3. Models predict a tight race influenced by inflation.

4. Voters’ views on prices and wages add unpredictability.

The Economy’s Role in the 2024 Election

As Americans cast their ballots, the economy plays a decisive role in the 2024 election. Alongside Vice President Kamala Harris and former President Donald Trump, the economic realities of recent years form an unofficial “third candidate,” pulling voter loyalties in various directions. While the U.S. economy has seen notable growth, inflation remains a persistent issue, and both trends are impacting voters’ perceptions.

Economic Growth and Inflation: The Balancing Act
Over the past few years, the U.S. economy has seen solid growth, creating jobs and lifting wages. However, inflation has also been at the forefront, with consumer prices rising sharply, making everything from groceries to housing more expensive. This mix of growth and inflation presents a mixed picture for voters trying to assess the health of the economy.

Consumer spending, an important measure of economic confidence, has actually increased in recent months. Adjusted for inflation, consumer spending was up by 3% in the last quarter, showing that, despite higher prices, people are still spending.

Predicting the Vote: Growth, Prices, and “Good News Quarters”
Historically, economists have looked at specific economic indicators to gauge election outcomes. Yale economist Ray Fair has developed a model that predicts the presidential vote based on three key economic variables:

1. Real GDP Growth per Capita: Economic growth, adjusted for inflation, tends to favor the incumbent party if it’s strong in the quarters leading up to an election. Under Biden, the GDP per capita has grown at a rate of 2% this year—the best since 2004 under President George W. Bush. This is a point in Harris’s favor.

2. Inflation (GDP Price Index): The model shows that voters remember inflation more than growth, often holding it against the incumbent. Over Biden’s term, inflation has grown at the fastest pace since the early 1980s, weighing heavily on the minds of voters. Despite wages rising faster than inflation in recent months, the high prices during Biden’s first years have left an impression, and memories of these price hikes linger.

3. “Good News Quarters”: This metric tracks quarters where GDP per capita growth exceeded 3.2%. During Biden’s term, there were four of these strong quarters, compared to three during Trump’s term leading up to the 2020 election.

Based on these indicators, Fair’s model gives Trump a slight edge, predicting a close race with Trump at 50.5% and Harris at 49.5% of the two-party vote share. It’s a virtual tie, showing how much economic factors have narrowed the race.

A Nation Divided by Economic Perception
Economic data tells one story, but Americans’ perceptions tell another. Polls show that Democrats tend to view the economy positively, reflecting satisfaction with job creation and wage growth. In contrast, Republicans generally view the economy as struggling, with memories of inflation and high prices influencing their views. This division is reflected in surveys like those from the University of Michigan, where partisan differences in economic perception are stark.

Yet consumer spending data reveals resilience: people are spending at higher rates, gas prices are lower than they were a year ago, and wages for many have outpaced inflation. This complex economic picture adds to the uncertainty. Economic indicators might predict an outcome, but voters’ personal economic experiences could sway their final choices.

Final Thoughts
No economic model can perfectly predict how people will vote, especially when unpredictable factors—like recent natural disasters or gas prices—are involved. Last week’s report of only 12,000 new jobs may cause some to feel uneasy, while lower gas prices could leave others feeling relieved. Ultimately, it’s likely that both Harris and Trump will point to the economy as a reason for their successes or struggles at the polls.

Reflection
This complex economic landscape reminds us of the importance of placing trust not just in earthly circumstances but in God’s provision. Matthew 6:19-21 encourages us to store up treasures in heaven rather than on earth, where situations like inflation and prices fluctuate beyond our control. As we weigh the future of our country, may we remember that God is our ultimate provider and sustainer, guiding us through both financial and spiritual uncertainties.