The Election And What It Means For Your Money

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The Dollar Decides: Economic Indicators And The 2024 Presidential Election

Surveys show that economic issues are always the top concern for voters, so what do Americans want out of their next president? According to a new report out this week from the Pew Research Center, 73% of Americans say strengthening the economy is their top policy priority this year. On the heels of entering the Peak 65 Zone, older Americans aged 65 and up, are even more specific: 77% say making sure the Social Security system is financially sound, and 61% would like to see work done on reducing health care costs.

With Super Tuesday behind us, the 2024 presidential election is kicking into high gear and shaping up to be a rematch between President Joe Biden and former President Donald Trump. As Election Day draws closer, experts say certain economic factors can help predict who will come out on top. In a new report, Mark Zandi, Chief Economist for Moody’s Analytics, and colleagues Brendan LeCerda and Justin Begley say gas prices, mortgage rates, real household income, and the overall status of consumer confidence will each play a deciding role in the race for the White House.

Of the economic factors in play, Zandi, who recently joined us on “Your Money Map,” and his colleagues say fuel prices are at the top of the list. “All else equal, if gas prices surge back close to $4 per gallon, Trump will win,” the report notes. Mortgage rates, which in recent years have skyrocketed, will also play a role, with the analysis noting that a hike in mortgage rates to more than 8.5% would “crush housing affordability” and harm Biden’s re-election prospects. On the other hand, a decline, which does look likely, would be “a modest plus for Biden’s re-election chances.”

Real household income will also be a deciding factor. In recent months, purchasing power has improved, and should that continue, it will bode well for Biden. “For real household incomes to end Biden’s presidency, they would have to suffer a significant decline by Election Day, consistent with a meaningful recession characterized by significant layoffs and surging unemployment, all else equal,” notes the report. Lastly, the economists say consumer confidence is another metric to follow. While it had been improving, in February, consumer confidence saw its first dip in three months.

All things considered, the economists predict a re-election victory for President Biden, however (and that’s a big however) they believe it will be a “nailbiter” with results easily changing depending on the economic headwinds. “The election could easily flip with only small shifts in the economy’s performance,” the economists note. Economics aside, President Biden’s approval rating, how well third-party candidates do, and of course, voter turnout could also influence the outcome. One thing is for sure, candidates will be making a special effort to entice older voters, as they are the most likely to head to the polls. According to numbers from the U.S. Census Bureau, in the last presidential election, turnout hit decades-high levels, with 76% of voters falling in the 65-74 year-old age bracket casting a ballot.

This is particularly important this year as we reach Peak 65, as our country experiences the biggest surge of retiring Americans in history, with over 11,200 turning 65 every day through 2027.

Only one in five Peak 65ers are confident in the solvency of Social Security according to the 2023 Protected Income & Planning Study, and so with issues like Social Security, Medicare, and the cost of living on the table, retirees and pre-retirees have a lot to be concerned about. And, as we’ve seen in the past, who’s in power can impact economic growth, policy, the markets, and countless other fiscal challenges we face as a country. “This time next year, lawmakers will be faced with a number of significant issues,” Zandi recently told reporters. “They’ll have to raise the Treasury debt limit again. The Trump tax cuts for high-income, high-net-worth households expire. Some Obamacare tax subsidies will wane. So, there’s a lot of decisions to be made, and that’s really key – how lawmakers address those decisions is really key to addressing the nation’s long-term fiscal challenges.”

WATCH Your Money Map: The Dollar Decides: Economic Indicators And The 2024 Presidential Election