Biden’s exit doesn’t alter our election scenarios

President Joe Biden’s decision to drop out of the election doesn’t warrant any immediate changes to our election scenarios nor the policies we anticipate the Democrats pursuing if they were to win in November.

What you will learn:

• Democrats need to name their nominee at the national convention in less than a month. The odds appear to be heavily in favor of Vice President Kamala Harris being the new Democratic nominee because several potential challengers for the nomination have publicly said they won’t while some Democrats are supporting a more open process. There is still uncertainty as some prominent Democrats have voiced their support for a ‘mini-primary’.
• We will update our election models this week but developments over the past few weeks signal a increase in Trumps lead. The model sample does include elections when the incumbent president didn’t run for reelection. In those cases, the president’s approval rating was a good predictor of voter sentiment toward his party and by extension the party’s presidential candidate. In this election that factor doesn’t work in the Democrats favor.
• We also won’t be making any immediate changes to our baseline forecasts for GDP growth, the labor market, inflation, or monetary policy for the rest of this year. But financial market conditions are a wildcard. Fundamentals matter most for financial markets and the economy, but uncertainty around the eventual presidential nominees could weigh on sentiment ahead of the first presidential primary elections. This election may be different, however.

For more insights on the 2024 US Presidential Election, click here.