Gas price surge could cost Biden reelection: Moody’s

A recent analysis by Moody’s Analytics found that rising gas prices could hurt President Biden’s re-election bid in November.

Moody’s currently projects that Biden will narrowly win the 2024 election, based on several political and economic factors, including gas prices.

Gasoline prices soared to an all-time high of more than $5 per gallon in the summer of 2022, before falling to around $3 per gallon. But Moody’s said it expects prices to rise again to around $3.50 a gallon by Election Day.

“Biden enjoys some tailwind from year-over-year declines in gasoline prices, but expected price increases in the second half of 2024 will erode much of the benefit,” Moody’s said. “That said, oil prices are particularly difficult to predict, and if prices significantly exceed expectations, the damage to Mr. Biden’s re-election could quickly mount.”

According to Moody’s, former President Trump will win the election if prices rise to near $4 a gallon. Like many Americans, Moody’s predicts the 2024 election will be a rematch between Biden and Trump.

Moody’s said there are other factors currently in Biden’s favor. Inflation has fallen significantly since reaching a 40-year high in June 2022. Despite repeated interest rate hikes by the Federal Reserve, the economy has remained surprisingly resilient, with unemployment remaining below 4%.

“In Biden’s favor, after more than two years of high inflation, real wages are rising again and will be well above pre-pandemic levels in most states by Election Day,” Moody’s said.

Mortgage interest rates, which tend to follow interest rates, have also fallen after rising to nearly 8% in October, a 20-year high.

But Moody’s also said a significant rise in mortgage rates and a significant decline in real household income “consistent with a severe economic recession characterized by large-scale layoffs and a sharp rise in unemployment” also contributed to a Biden victory in November. It is said to be potentially threatening.

The president could receive a tailwind if the Fed begins lowering interest rates this year as expected, according to Moody’s. Most Fed officials said in December that they expected at least two rate cuts in 2024, with the largest proportion expecting three cuts.

At its most recent meeting this week, the central bank opted to keep interest rates unchanged at a range of 5.25% to 5.5%, with Fed Chair Jerome Powell sounding the alarm on expectations of a rate cut at its next meeting in March.

“We want to see better data. We’re not asking for better data,” Powell said, later adding that a March rate cut “is probably not the most likely case.” ” he added.