Biden's 2024 Chances Hinge on Fed Cooling Inflation Without Causing Recession
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The 2024 presidential election outcome will hinge on how successful the Fed is at cooling inflation without causing a recession. If there is a recession in 2023, it would likely doom Biden's re-election bid.
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Fed Chair Jerome Powell has raised rates aggressively to fight inflation, but it's unclear if this will slow inflation in time to help Biden in 2024. The economy needs to cool fast to avoid more rate hikes.
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If inflation rebounds in 2024, it puts the Fed in a tough spot. They may have to raise rates again right as voters are paying attention, which could hurt Biden.
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Biden and Powell share the goal of reducing inflation, but their preferred economic outcomes differ. Biden wants to avoid a recession that would damage his re-election prospects.
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It's uncertain how the economy will look in 2024. If growth remains strong and inflation high, the Fed may have to raise rates again, even during the election campaign.