The presidential campaign is in full swing, and Pennsylvania, and more specifically Philadelphia, could decide the winner.
This prediction is based on a presidential election model that my colleagues at Moody's Analytics and I have used to predict who the next president will be in elections dating back to the 2000 Bush v. Gore election. . Under this model, the incumbent presidential candidate, in this case Joe Biden, would win the popular vote in each state and the District of Columbia and win the Electoral College votes needed to win the election.
Given that we are economists, the principle underlying our model is that while the economy may not be top of mind for voters in every election, it is a close second or worse. It is not surprising that there are very few In other words: “It's the economy, idiot.”
But while economic performance and perceptions of that performance are important in deciphering the behavior of undecided voters and are crucial in predicting close elections, political variables also influence state-by-state voting. It is powerful in predicting.
Previous voting patterns and third parties
The most important political variable is how the state has voted in past elections. For example, Wyoming, which always votes for Republican candidates, is expected to vote for former President Donald Trump in this reelection. Rhode Island has always been Democratic and will likely go to Biden.
Voter turnout is also an important variable in determining election results, and even small changes in turnout can flip an election. The 2020 presidential election had the second highest turnout since 1936, with well over two-thirds of the eligible population voting. In the next election, we assume turnout will be the same as his 2020.
Third-party candidates could sway the election, and that is a real possibility this year. Prominent independent candidate Robert F. Kennedy Jr. is actively trying to get on the state ballot, but No Labels, which bills itself as a nonpartisan organization, appears intent on fielding its own candidate.
economy and personal consumption
Regarding economic factors, growth in real household income, which is an indicator of voters' purchasing power, is particularly important. In Biden's favor, after a period of high inflation, after-inflation wages are rising again and should be well above pre-pandemic levels in most states by Election Day. Unemployment rates remain low and stable across the country, supporting strong wage increases.
Gasoline prices play a large role in shaping voters' perceptions of inflation and economic well-being. Most Americans buy gasoline on a regular basis and are familiar with prices and their changes.
Sanctions on Russian oil and OPEC+ production cuts drove gasoline prices to historic highs of more than $5 a gallon, but they are now back to near $3.50, about the level expected on Election Day. . That being said, predicting oil prices is dangerous. If the price rises above $4 again, the damage to Biden's re-election is likely to be insurmountable.
Fixed mortgage rates are another key element in the election model, and given their rapid rise since Biden became president, they could play an even bigger role in this election. Combined with rising home prices since the start of the pandemic, housing affordability has taken a hit. Many people view the purchase of their first home from an emotional standpoint as the foundation of a good community, a path to building wealth, and often a rite of passage into the middle class. Seeing homeownership drifting out of reach can deepen financial anxiety and dissatisfaction.
Although fixed mortgage interest rates remain high at just under 7%, they have fallen significantly from their peak of around 8% at the end of last year, and we expect them to be lowered a little more by Election Day. This is a modest positive for his chances of re-election.
Battleground states seize power
Of course, the results of the election model depend on our projections about the strength of the economy from now until Election Day, as well as various political assumptions about turnout and the prevalence of third-party candidates. But he remains confident in his model's 2024 prediction of who the next president will be, although the election will almost certainly be tough. That's Biden.
More precisely, Biden is projected to win 308 electoral votes, 38 more than the 270 needed for re-election. That's about the same as his tally in 2020, when he received 306 votes. Similar to the close and contentious 2020 election, the 2024 election will be decided in several battleground states. Five states are decided by differences of less than 1 percentage point. Those states are Arizona, Georgia, Nevada, North Carolina, and yes, Pennsylvania.
Biden's projected electoral college win of 308 provides some cushion. As he begins to flip the results of his slimmest wins, losses in North Carolina and Nevada reduce his vote total to 286, still enough to achieve his victory. Losing Georgia, which has 16 electoral votes, would put Biden at the exact threshold needed to win a second term. So Pennsylvania will hold the key to national elections, and if history is any guide, Philadelphia will hold the key to how the state votes.
Of course, this isn't lost on Biden and Trump either, so expect plenty of political ads and rallies in the coming weeks.
