Inflation could cost Democrats control of Congress

The incumbent president’s party almost always struggles during midterm elections. But President Joe Biden may face a particular challenge no president has faced in midterms for nearly 50 years: declining incomes due to high inflation.

This is rare. University of Denver political scientist Seth Masket has modeled how changes in real per capita disposable income are related to midterm results for the president’s party. The metric helps capture how the economy is experienced by the average voter: are their wages going up or down, when adjusted for inflation? Can they afford more things, or fewer?

The data covers 1950 to 2018, and it spans 18 midterm elections. In 15 of these midterms, real incomes were increasing. Only three midterms featured negative real income growth by Masket’s metric, and all went badly for the president’s party, with two being among the worst performances in modern times.

When I updated these numbers with the latest economic metrics under Biden, they didn’t look good:

Depending on how you slice this data, it may look a bit different. Masket compared, specifically, real income growth from the second quarter of the year before the midterms, to the second quarter of the midterm election year. (He also plotted that against loss of House seats, while I used the national House vote results.)

A study by researchers at the Federal Reserve Bank of Dallas found that real wage growth during the pandemic has been “slightly positive” once changes in composition of the workforce are controlled for. That Dallas study, though, also found that real wage growth turned negative in the second half of 2021 because inflation shot up.

And as Masket points out, there is a complication here. The three midterms here with negative income growth — 1954, 1958, and 1974 — all occurred in the midst of, or right after, recessions. This year, there is continuing disruption due to the Covid-19 pandemic, but the economy is growing strongly and only briefly fell into recession at the beginning of 2020. Other metrics are rosier: GDP growth looks good and the unemployment rate is low. This is a bit of a different situation than prior periods of negative income growth and, Masket tweeted, it “adds to the uncertainty” about this year.

Still, large majorities of poll respondents have been saying they think the economy is in bad shape and that Biden hasn’t been handling it well. Biden’s approval rating started declining more rapidly in the second half of last year, as inflation began really picking up, and it’s currently around 41 percent. According to NBC News, the White House is trying to brainstorm a new economic message — but there may be no substitute for improving workers’ real wages.