Economic indicators have historically been powerful predictors of who will win the White House, and this year is no exception. With polls showing Kamala Harris and Donald Trump in a close race, how do the key economic metrics favor each candidate?
The Misery Index, which combines inflation and unemployment rates, is used to measure economic discomfort. With inflation at 3-4% and unemployment below 4%, the current Misery Index is around 7. The incumbent party has historically won with a 60-65% chance when the Misery Index is below 10. Yet Republican candidates continue to claim we’re headed toward a depression, despite the numbers saying otherwise.
Next is GDP growth, which is a strong indicator of how well the economy is performing. Growth is currently at a steady 2-3%, and when GDP growth exceeds 2%, the incumbent party wins about 75% of the time. Republican candidates continue to highlight economic woes, but these steady growth numbers give Harris a stronger case. That said, not all sectors are feeling this growth equally. Many workers, particularly in rural areas or energy sectors, may feel left behind by the recovery, and Trump’s messaging often targets these voters.
Real disposable income—the money people have left after taxes and inflation—is growing modestly at 1.5-2%. This gives Harris an edge since income growth of any kind correlates with an 80% chance of the incumbent party winning. However, inflation has outpaced wage growth in certain areas, meaning that for some voters, real wages have stagnated. This economic anxiety could help Trump, especially if voters feel their paychecks are not keeping up with rising costs.
Then there’s the Consumer Confidence Index, which reflects how optimistic voters feel. The current level is 105, enough to tilt things toward Harris, as confidence over 100 tends to favor the incumbent with a 65-70% probability. Still, Trump continues to hammer the message that the economy is in a tailspin, pushing his supporters to believe drastic change is needed. His focus on issues like rising energy costs and dissatisfaction in manufacturing-heavy regions may resonate with voters who feel disconnected from the broader economic recovery.
