Inflation's Historical Presidential Election Impact
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Recent analyses have identified the price inflation since President Biden took office as a strong headwind against his re-election. Wall Street Journal reporters Stephanie Stamm and Jesse Newton, for example, noted in an April 4 article that a typical grocery basket costs 36.5% more today than in 2019.  The most recent CPI data from the Bureau of Labor Statistics report an overall price rise of 18.75% since February, 2021, Pres. Biden’s first full month in office. 

There is, however, an important distinction that must be considered in assessing the impact of price inflation data on the popular vote for President. 

We recently published an article in Social Science Research Network, ID 4657592, that identifies the economic forces that influence the share of the popular vote received by the incumbent party for the 17 Presidential elections over the 1956-2020 period. Our work identifying those forces has uncovered that voters remember inflation data only from nine months before an election. Employment data also have an impact on Presidential elections: here, voters’ memories go back 21 months.  We derived these lags by testing every possible combination of monthly lags back from the election date, for every Presidential election since 1956. The 9-month memory for CPI and 21-month memory for employment held up consistently better than any other lag structure. 

This finding has some historical precedent. During the first year of the Reagan presidency in 1981, for example, the monthly CPI increased at rates that ranged from 9.7 to 11.4%. When President Reagan scored a landslide in his re-election victory, inflation had dropped to 4.3 percent. As our empirical findings demonstrated, voters seemed to remember the subdued inflation during the election year more than they did the double-digit inflation early on in Reagan’s presidency.
This disparity in voters’ memories for inflation and employment data will come as a boon to President Biden.  The 7.87% inflation of his first twelve months in office, and the 6.04% rate of his second year, are now out of the window of salience.  The 3.1%, 3.2%, and 3.5 % numbers of this year’s first three months are in the window; but they are dramatically lower than those of the first two Biden years.
Also in President Biden’s favor is the longer window of relevance for employment data.  From February 2023 (when the 21-month window opened) to September 2023, the monthly growth in employment fell below an annual 2% rate only once; and was as high as 2.77%. 
Since then, however, it has never been above 2%. A slowing rate of job growth in recent months would matter more were voters only focused on those months. Going back 21 months, however, gives Pres. Biden the benefit of the more robust growth associated with the end of Covid restrictions. Our model predicts that voters won’t forget that earlier period for employment data, though they will for price data. 

How good has the model worked in the past? The model correctly predicted the outcome of the popular vote for President in 15 of the 17 elections since 1956. 
There were two narrow misses: 1960 (where the Presidential popular vote difference between Kennedy and Nixon was 0.20%) and 1968 (where Nixon beat Humphrey by 0.70%). Using the most recent data, our model predicts a popular vote victory for President Biden of 7%.  

One final caveat: Presidents are chosen in the Electoral College, not by popular vote tallies. While we forecast President Biden’s winning more popular votes than former President Trump, we make no prediction on whether he will distribute those votes across the battleground states sufficiently to win 270 votes in the Electoral College. 
However, with an overall popular vote margin as high as 7%, the Electoral College victory is more likely than not.  Two recent elections were won by the popular vote loser, but the popular vote margin was much less than 7% (Hillary Clinton beat Donald Trump by 2% of the popular vote; Al Gore beat George W. Bush by 0.5% of the popular vote.)
Jim Doti is Jim Doti is President Emeritus and Rick Muth Family Chair in Economics at Chapman University. Tom Campbell is a professor of economics and a professor of law at Chapman University and a former Member of Congress from Silicon Valley. 

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