Quick Take
The federal funds rate, currently steady at a noteworthy 5.33% — a peak unseen since 2001 — indicates the ongoing battle against one of the harshest inflation rates in the past forty years. However, with the U.S. CPI YoY decreasing from over 8% to a mere 3.2%, the intense inflationary pressure seems to be easing. While the Federal Reserve has paused rate hikes for now, the elevated rate could potentially trigger economic repercussions.
As of now, the prospect of a recession seems distant rather than imminent. Still, as we hurtle towards the 2024 U.S. elections, we cannot completely dismiss the possibility, given the historical patterns of recessions coinciding with election years.
A retrospective analysis of US elections and recessions since the 1950s reveals intriguing overlaps that defy the prevailing dismissal. From the COVID-19 recession coinciding with 2020’s electoral face-off to the ‘Great Recession’ shadowing the 2008 presidential race, historical data presents a compelling trend. Further, the Early 2000s, Early 1990s, and Early 1980s recessions all occurred within close temporal proximity to presidential elections. Even dating back to the 1950s and 1970s, presidential elections and economic downturns were often close timeline neighbors.
While this historical recurrence does not constitute an economic rule, it poses an interesting question: Could the 2024 election year be a stage for another recession?
| Recession | Election | Overlap |
|---|---|---|
| 1957-1958 Recession | 1956 Election (Eisenhower vs Stevenson) | Yes |
| 1960-1961 Recession | 1960 Election (Kennedy vs Nixon) | Yes |
| 1969-1970 Recession | 1968 Election (Nixon vs Humphrey) | Yes |
| 1973-1975 Recession | 1972 Election (Nixon vs McGovern) | Yes |
| 1979 Energy Crisis Recession | 1976 Election (Carter vs Ford) | No |
| 1981-1982 Recession | 1980 Election (Reagan vs Carter) | Yes |
| 1990-1991 Recession | 1988 Election (H.W. Bush vs Dukakis) | No |
| Early 2000s Recession | 2000 Election (W. Bush vs Gore) | Yes |
| Great Recession (2007-2009) | 2008 Election (Obama vs McCain) | Yes |
| COVID-19 Recession (2020) | 2020 Election (Biden vs Trump) | Yes |
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