An unusual model for economists — the so-called ‘misery index’ — bodes badly for President Joe Biden’s Democratic Party in the upcoming midterm elections.
Based on past voting patterns, the Democrats can expect to lose 30 to 40 seats in the House and also several in the Senate, says a Bloomberg Economics study.
In that scenario, Democrats would lose their already-weak grip on both chambers and Republicans would control Congress for the rest of Biden’s term.
The misery index is calculated by adding up the inflation and unemployment rates to create a measure of voters’ likely attitudes when they cast ballots on November 8.
By October, the index could have hit 12 percent. Barring a spike in early 2020 at the start of the Covid-19, that would be the highest level since the dragged-out recession in 2011.
Models for predicting elections are far from perfect — but the misery index has been relatively successful over the decades.
Other midterm election forecasts range from sweeping Republican gains to an effective wash. Still, there is a consensus in Washington that inflation at 9.1 percent and high gas prices will hurt Democrats.
Liz Young, an investment strategist at finance firm SoFi, said the index was elevated ‘but still way lower than in the 70’s and 80’s when both inflation and unemployment were high’.
The study was released after a glut of gloomy economic indicators.
The Federal Reserve last week announced it would increase interest rates by 0.75 percent, hitting the brakes on the economy in a bid to control surging inflation.
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The rate hike will cause interest rates on mortgages, credit cards and all types of loans to go up, causing monthly bill payments to soar and hurting Americans’ ability to repay debts…. (Read more)
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