Research Briefing | Jan 25, 2024

Voters’ mood on inflation will determine the election

Inflation is poised to weigh on the psychology of the swing voter, who will be pivotal in determining the outcome of the 2024 presidential election in a handful of battleground states. How these swing voters perceive inflation, among other economic developments, will likely determine the election.

What you will learn:

  • Oxford Economics has constructed three state-based election models that seek to capture the different perspectives on inflation that swing voters may have. If these voters fixate on the cumulative increase in the level of consumer prices since Biden’s inauguration, former President Donald Trump is projected to win. If swing voters focus on just the y/y change in prices or their inflation-adjusted incomes, then incumbent President Biden is projected to win.
  • The model with the best track record assumes swing voters focus on the y/y change in consumer prices as of Q3 2024 and projects a Biden win. However, it would not take too much of a negative inflation shock for Trump to win according to this same model. We forecast US inflation to average 2.4% in Q3 2024, but if it was 4.3% or more, that would be enough to tip the scales in favor of the former president.
  • Will swing voters focus on the loss of the purchasing power they experienced during the high inflation of the past few years? Or will they instead judge the political status quo on the strength of today’s economy – falling inflation, rising wages, low unemployment, and rising wealth? This is the biggest uncertainty that our election analysis lays bare.
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