A spike in gas prices might put President Biden’s reelection in November at risk, according to a recent analysis by Moody’s Analytics.
Moody’s current prediction suggests that Biden is poised to secure a narrow victory in the 2024 election, considering various political and economic factors, including the impact of gas prices.
Following a peak of over $5 per gallon during summer 2022, average gas prices have now dropped to approximately $3 per gallon. Nonetheless, Moody’s anticipates a future increase, projecting prices to reach around $3.50 per gallon by Election Day.
According to Moody’s, President Biden is currently benefiting from the decrease in gasoline prices. However, they predict that this advantage will diminish due to an anticipated increase in late-2024. It is worth noting that forecasting oil prices is challenging, and if the prices rise beyond expectations, it could significantly harm Biden’s chances of re-election.
Moody’s predicts that if gasoline prices approach $4 per gallon, former President Trump will have an advantage in the election. Like numerous Americans, Moody’s anticipates a potential 2024 rematch between Biden and Trump.
According to Moody’s, several economic factors currently favor Biden. Inflation has notably decreased since reaching a 40-year peak in June 2022. Despite the Federal Reserve’s repeated interest rate hikes, the economy has displayed unexpected resilience, with unemployment consistently staying below 4 percent.
“To Biden’s benefit, after more than two years of high inflation, real wages are growing again and by Election Day will be well above pre-pandemic levels in most states,” Moody’s noted.
Following a surge to an almost 8 percent two-decade high in October, mortgage rates, which typically track interest rates, are now declining.
Biden’s Electoral Prospects at Risk
Moody’s discovered that a substantial increase in mortgage rates or a notable decrease in real household incomes, aligned with a significant recession marked by widespread layoffs and rising unemployment, could potentially jeopardize Biden’s chances of winning in November.
According to Moody’s, the president stands to benefit if the Federal Reserve follows through with the anticipated interest rate cuts this year. In December, a majority of Fed officials indicated their expectation of at least two rate cuts in 2024, with the highest proportion projecting three cuts.
“We want to see more good data. It’s not that we’re looking for better data,” Powell said, later adding that a cut in March is “probably not the most likely case.”
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