In a close presidential race where the state of the economy is a crucial issue for American voters, the perception of inflation in battleground states could play a significant role. Bernard Yaros, lead economist at Oxford Economics, emphasizes the importance of how voters in key states like Pennsylvania perceive inflation. Yaros’ research suggests that Pennsylvanians are particularly sensitive to inflation, with higher inflation levels potentially leading to a shift in votes away from the incumbent and towards the challenger.
The lower median household income in Pennsylvania, along with its slightly older population, may contribute to the state’s heightened sensitivity to inflation. Yaros points out that lower-income individuals, who spend a larger portion of their earnings on essentials, are more likely to be negatively impacted by inflation. Additionally, older individuals on fixed incomes may feel the effects of high inflation more acutely. Given the statistical tie between Vice President Kamala Harris and former President Donald Trump in Pennsylvania, the outcome of the election in the state could hinge on voters’ perceptions of current inflation levels.
While overall U.S. prices have increased significantly since 2020, inflation has cooled to an annual rate of 2.4%, closer to the Federal Reserve’s target of 2%. Yaros highlights the importance of whether voters focus on the cumulative price rise since 2020 or the recent decline in inflation rates. If voters in Pennsylvania continue to focus on the higher prices seen since the pandemic, Trump is projected to win the state, while a shift in focus to the recent decrease in prices could benefit Harris.
Some battleground states, like those in the Sun Belt region, have experienced higher inflation rates since 2020 compared to the national average. States in the Middle Atlantic region, including Pennsylvania, saw prices rise 3.4% last month, a percentage point higher than the national rate. Yaros’ analysis suggests that voters in states like Arizona, Georgia, and Wisconsin may also be influenced by their perceptions of inflation, with a focus on high prices potentially swinging votes towards Trump.
Many Americans tend to associate inflation with the prices they pay for goods and services, rather than the change in prices over time measured by the Consumer Price Index. Despite the recent cooling of inflation, prices remain high, and only a period of deflation, typically seen during economic downturns, can bring them down. Voters who consider the recent decline in inflation rates may lean towards supporting Harris, based on Yaros’ “misery-index model,” which looks at the sum of the unemployment rate and the inflation rate.
While the state of the economy, including inflation, is a crucial issue for voters, other factors like immigration and abortion could also sway their decisions in the upcoming election. The disconnect between consumer sentiment measures and actual consumer spending adds another layer of uncertainty to predicting voter behavior. Yaros acknowledges that numerous factors will influence the election outcome, making it difficult to predict how voters in battleground states will ultimately cast their votes.
