Conventional wisdom in politics has long been that Americans vote with their pocket money. If the economy is bad, voters will oust the incumbent. Never mind that unelected institutions like the Federal Reserve probably have more control over the economy than the president, and that the president is not personally responsible for the job numbers. If the president is on “watch” with slowing economic growth, high unemployment and inflation, and declining 401(k) balances, he will pay the price at the polls. As Democratic strategist James Carville famously said, “It’s the economy, you idiot,” to sum up upstart Bill Clinton’s successful 1992 presidential campaign.
Some politicians even believe they can predict election outcomes with a simple statistical formula: the “misery index,” a combination of the unemployment rate and the annual rate of inflation. Invented by economist Arthur Okun during the economically dire 1970s, the index was created in the summer of 1980 by President Jimmy Carter, who was facing a misery index of nearly 22, and who won only six states and D.C. in the general election. It is said to explain why they did not win (despite the energy and Iranian hostages, the crisis did not help). According to economic research and investment firm Strategas, the misery index has predicted the winner in 15 of the past 16 presidential elections and every presidential election since 1980, and the misery index has predicted the winner in 15 of the past 16 presidential elections and every presidential election since 1980. 7.353 (currently at that level at 6.73).
But even if voters tell pollsters that it’s a priority, there’s evidence that it’s not really the economy anymore, it’s stupid. Or maybe it’s the economy in name, but the economy as defined by Republican leaders and the media, both of which tend to emphasize the downside. Macroeconomist Dean Baker points out that even though wage growth has outpaced inflation, inflation has become the main theme in the media, saying, “It’s hard to imagine how bad things are under the Biden administration.” There was a never-ending drumbeat going on.”
