With the majority of experts predicting a looming recession within the next year, Vice President Joe Biden may have a vested interest in ensuring it begins sooner rather than later.
The historical record shows that economic downturns have spelled doom for the re-election prospects of the last three one-term presidents: Jimmy Carter, George H.W. Bush, and Donald Trump. On the other hand, a handful of presidents have managed to weather recessions during their terms and secure re-election, including George W. Bush, Richard Nixon, and Ronald Reagan.
The key distinction lies in the timing. Recessions tend to be swiftly resolved under two-term presidents, while the economy tends to suffer under single-term presidents, as voters weigh their options.
Therefore, the Democrats’ best-case scenario would be a short recession that commences shortly and concludes by the time of the 2024 Election Day.
Larry Bartels, a professor at Vanderbilt University specializing in the relationship between politics and economics, suggests that a recession in the second half of 2023 would be less detrimental to the president’s re-election prospects than a recession in the first half of 2024. However, he also notes that Biden’s influence over the economy is limited and immediate changes are unlikely.
According to the economic predictions accompanying the Federal Reserve’s recent decision to maintain interest rates, policymakers perceive less risk of a slump. Government economists have raised the median GDP growth forecast from 0.4% in 2022 to 1% in 2023, with further acceleration anticipated in the following years.
The reaction of bond investors to the rate decision indicates an increased belief in the likelihood of a recession within the next year.
If an early, brief, and mild recession were to occur, it would give Biden an opportunity to restore economic stability. The average duration of modern recessions is around 10 months. However, if the next recession were to arrive late, persist for a long period, and be severe, Biden might find himself joining the ranks of presidents whose terms were marred by the Great Depression.
Recent surveys suggest that the probability of a recession occurring within the next 12 months has risen from 31% to 65% among analysts.
Another study indicates that the coming year may witness a return to moderate growth in real GDP, with growth approaching 2%. While not particularly impressive compared to other periods, this trend could be promising for Democrats.
However, it is important to note that economic growth alone is not the ultimate goal. A study conducted by Biden’s 2020 pollster, Celinda Lake, found that voters were more concerned about the state of the economy six months prior to the election than any other issue.
Republicans eyeing the 2024 presidential race have criticized Biden’s economic management, attributing the country’s inflation rate reaching 9.1% in mid-2022 to his policies. This marked the highest inflation rate in four decades. Nevertheless, recent information shows that the rate has leveled off at 4%.
While former President Trump has been claiming for nearly a year that the United States is already in a recession, Vice President Pence made reference to a “looming recession” in his recent campaign announcement video.
Biden, however, does not readily accept the reality of an imminent economic downturn. Earlier this year, he predicted a recession, saying, “They’ve been telling me since I got elected we’re going to be in a recession.”
In a campaign speech to union members in Philadelphia, Biden lauded the city’s recovery from the Great Recession and argued that the bills he supported concerning infrastructure, clean energy, and semiconductors would aid the city’s long-term economic prospects.
He exclaimed, “The investments we’ve made these past three years have the potential to reshape this country for the next five decades. And who
do you think will be at the center of that change? You.”
Responding to recession forecasts, White House spokesman Andrew Bates commented, “They keep turning out like pollsters’ calls before the midterms: wrong.”
Nevertheless, Biden acknowledged in an op-ed for the Wall Street Journal this month that the United States must remain vigilant and guard against potential risks.
Celinda Lake, during a discussion about the economy, noted that Biden’s optimism seemed disconnected from the current state of affairs. “I see it now,” he said. “Well done, but not quite up to snuff.”
Forecasting the timing and nature of each recession is challenging since they are unique events.
Joel Prakken, co-head of U.S. Economics at S&P Global Market Intelligence, anticipates a decline in the misery index—which takes into account both unemployment and inflation—by November 2024. However, voter sentiment may not be accurately reflected in these data.
“Inflation is intolerably high, unemployment is unsustainably low,” he remarked. As one expert put it, “This will feel bad, whatever label our profession ultimately attaches to it.”
Once the elections take place, people begin to pay closer attention to how the president manages the economy, effectively ending the two-year grace period that presidents often enjoy for the “inherited” state of the economy.
If this holds true, then Biden may face serious challenges.
While voters may not delve too far back in time, events occurring within the previous two years do factor into their decision-making process.