Biden's Re-election Success Depends on a Soft Landing for the US Economy

Goldman Sachs Analyzes Economic Indicators Predicting Voter Behavior

Will President Joe Biden be able to secure re-election in the upcoming U.S. presidential election this November?

On the 20th (local time), Bloomberg analyzed four economic indicators that Goldman Sachs found helpful in predicting past voter behavior, stating, "President Biden's economy is likely near the borderline that separates victory from defeat in the election." Since future variables have not been factored in, there is a prospect that if President Biden achieves a soft landing for the economy during the remainder of his term, his chances of re-election could increase accordingly.

Goldman Sachs compared President Biden with four presidents who won re-election?Ronald Reagan, George W. Bush, Bill Clinton, and Barack Obama?and three presidents who failed to secure a second term?Donald Trump, George H. W. Bush, and Jimmy Carter. This comparison is based on the general observation that Americans tend to evaluate how prosperous the economy was during a president’s term when deciding whether to give that president another chance.

First, Goldman Sachs focused on whether national consumption increased during the term. For President Biden, the two-year average (calculated up to the quarter before the vote) real personal consumption growth rate is projected at 1.86%, ranking 6th out of 8 presidents. This is lower than former presidents Trump (1.95%) and George H. W. Bush (1.94%), who failed to win re-election, but higher than former President Carter (0.66%).

Wage growth is another economic indicator influencing voter behavior. In the third quarter of the election year, the change rate in nonfarm payrolls for President Biden was 1.19%, ranking 5th after Reagan (4.91%), Clinton (2.19%), Obama (1.64%), and George W. Bush (1.35%), all of whom won re-election. Former presidents George H. W. Bush (0.54%), Carter (-0.26%), and Trump (-6.97%) ranked 6th to 8th.

Inflation rates similarly affect voter decisions. The two-year average (up to the quarter before the vote) Consumer Price Index (CPI) for President Biden is predicted at 3.98%. This places him behind four re-elected presidents?George W. Bush (2.34%), Obama (2.55%), Clinton (2.81%), and Reagan (3.82%). However, he is ahead of former presidents George H. W. Bush (4.04%) and Carter (11.95%), who failed to win re-election. While low inflation generally favors re-election, there is an exception as former President Trump (1.64%) ranked first.

Lastly, real Gross Domestic Product (GDP) is considered. In the quarter before the vote, Biden’s GDP growth is estimated at 1.0%, ranking 6th. This is lower than the four re-elected presidents?Reagan (6.9%), Clinton (4.1%), George W. Bush (3.5%), and Obama (2.6%)?and also behind former President George H. W. Bush (3.7%), who failed to win re-election. Behind Biden are former presidents Trump (-1.5%) and Carter (-1.6%).

Bloomberg pointed out factors that could change the situation before the November election, such as the timing of Federal Reserve (Fed) interest rate cuts, economic recession, and Middle East conflicts. This implies that if President Biden effectively addresses the challenges he faces during the remainder of his term, the economic indicators influencing voter behavior could improve. However, Bloomberg added, "Presidential elections are not merely a verdict on the economy," noting that issues like Trump’s criminal trials and Biden’s memory could also impact voting.