During Bill Clinton’s 1992 presidential campaign, strategist James Carville emphasized the importance of the economy with his famous phrase written on a whiteboard: “The economy, stupid.” Unemployment was high after a recession, and Carville understood the significant role the economy plays in elections. The incumbent, George H. W. Bush, was perceived to have mishandled the economy, further highlighting its importance in electoral outcomes.
A notable study conducted by Oxford Professor Stephen Fisher in Britain examined the relationship between economic crises and elections throughout the 20th century. The findings revealed that economic crises have a profound impact on elections, especially for the party in power. When there were no economic crises preceding elections, the incumbent party won in 10 out of 13 cases. However, when an economic crisis occurred prior to the election, the party in power lost in 9 out of 14 cases. This suggests that if there is an economic crisis, the party in power has a roughly 64% chance of losing the election.
Although a similar study hasn’t been conducted in the United States, a glimpse into history provides instructive insights. From 1948 to the present, the economy experienced a recession in five election years: 1948, 1960, 1980, 2008, and 2020. Out of these years, the party in power only managed to retain the presidency in 1948 when Harry Truman ran. In the other four years, challengers emerged victorious: John F. Kennedy in 1960, Ronald Reagan in 1980, Barack Obama in 2008, and Joe Biden in 2020. This suggests that the impact of a recession on elections is even more pronounced in the United States compared to Britain.
So, what does all of this mean for the 2024 election? Many economists have been predicting a recession for some time now. Federal Reserve Chairman Jerome Powell has been raising interest rates in response to high inflation. This has fueled expectations for an upcoming recession, and various indicators such as the inverted yield curve point towards a downturn. The housing market, often a reliable indicator, has been overvalued and is experiencing declines in house prices, which could lead to layoffs in the construction sector and trigger a recession.
If construction employment starts contracting in the next six months, it could have significant implications for President Biden’s re-election chances. Looking closely at construction employment numbers between now and February will be crucial for political strategists. If a recession occurs, Biden could potentially face re-election amidst economic turmoil.
In summary, Carville’s emphasis on the economy during the 1992 campaign highlights its significance in elections. Studies have shown that economic crises strongly impact electoral outcomes, particularly for the party in power. History in the United States also suggests that recessions have a decisive effect on elections. With the possibility of a recession looming before the 2024 election, monitoring construction employment data will provide valuable insights into the economic landscape and potentially impact President Biden’s re-election prospects.
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