Where the U.S. economy stands on election eve
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Illustration: Lindsey Bailey/Axios
As voters make their choice for the next president, the U.S. economy is by most measures stronger than it has been in modern election cycles — but with some exceptions that help explain voter discontent with conditions.
The big picture: Politics — and why people vote as they do — is more complicated than any data series you might download from a government website, and the definition of a "good economy" is in the eye of the beholder.
- But the go-to measures that economists use to assess well-being look better now than they have even in past election cycles remembered fondly as celebrations of economic good times.
By the numbers: The unemployment rate was 4.1% in October, the lowest in the month before a presidential election since 2000.
- In comfortable victories for the incumbent party in the past, joblessness was meaningfully higher: 7.4% in 1984, 5.4% in 1988, 5.2% in 1996, 5.5% in 2004 and 7.8% in 2012.
Inflation has, of course, weighed on public sentiment. But over the 12 months ended in September, the Consumer Price Index rose only 2.4%.
- That is lower than it was in past election cycles remembered favorably for economic conditions, including 1984 (4.3%), 1988 (4.2%), 1996 (3%) and 2000 (3.5%).
- Cumulative inflation over the duration of President Biden's term looks worse — and is likely a factor behind low readings on consumer sentiment.
- From Biden's inauguration in January 2021 through September, the Consumer Price Index is up 19.9%. That is the highest in the equivalent period before a presidential election since 1984 (20.1%).
The intrigue: Economist Douglas Hibbs built a simple "Bread and Peace" model for predicting vote share in a presidential race that shows a strong correlation between growth in inflation-adjusted per-capita disposable personal income and how the incumbent party performs.
- Using Hibbs' preferred measure, the Biden economic record is middle-of-the-pack compared to other modern election cycles.
- From December 2020 to September 2024, real disposable per capita income is up 5.9% (January 2021 numbers were severely distorted by pandemic stimulus, so we're using the month before Biden was inaugurated as a starting point).
- That is better than the equivalent results in the 1996 election (3.7%) or 2012 election (3%). But it is worse than the results leading up to races in 1984 (11.5%), 1988 (9.1%) or 2004 (7.2%).
Between the lines: The inflationary spurt of 2021 and 2022 damaged Americans' real incomes, which weighs on their household finances — and economic sentiment — to this day.
- But the balance of conditions has been much better in 2023 and 2024, and the labor market has remained one of the best of modern times.
- How that nets out as people enter the voting booth is the stuff political scientists and campaign strategists alike will study for years ahead.
