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Wednesday, August 10, 2022

Will Republicans Control the US House With Gas Prices?

If control of the House of Representatives passes to Republicans this fall, economist Jim Dotti thinks he has found a place driving political change: the gas pump.

Chapman’s seasoned economic forecasters were trying to see what historical economic, demographic or voting pattern factors could provide a numerical indication of where control of the House is at stake for the November midterm elections.

Dotti’s formula suggests Republicans will gain control of the House by flipping 53 of the legislative body’s 435 seats on the GOP side of the political aisle in November. The flip isn’t too surprising considering the party that controlled the White House lost an average of 27 seats in the midterms since World War II.

Political track records are by no means any foolproof predictions of future election results. But Dotti was shocked to discover this decisive vote-changer is bad news for President Joe Biden and his Democrats: record-high gasoline prices.

“First of all, let me say it was a big surprise to me,” Doti says.

price points

Pain in the pump was not on Dotti’s mind when he began research with fellow Chapman Professor Fadel Londie. He was betting that inflation would be followed by big vote swings – and in 2022 it would hit a 40-year high.

But when professors looked at voting patterns versus traditional measures of living, such as the consumer price index, Dotti said, “I found nothing, even when you look at some of our high inflationary periods.”

So gasoline prices were included in their formula, and to the professors’ surprise, fuel inflation was an important political driver. When the price of gasoline was high, the out-of-power party gained more House midterm seats.

10 Southern California real estate trends to track

In the White House the party only increased its political base in the House twice in the midterm – Bill Clinton’s second term (1998) and George W. Bush’s first term (2002).

In both of those external periods, gas prices were falling.

So why is gasoline — a relatively modest expense for many Americans — such a political flash point? This is the simplicity of economic measurement.

“People fill the tank every week. They see these big prices,” says Doti. “It’s not like reading the CPI. Or reading the Wall Street Journal. It’s affecting their pocketbook, and they get it. They’re excited.”

bad start

Dotti’s research shows that Democrats start the midterm political season in a weak position.

The model revealed the Democrats’ modest House advantage – it’s currently only a 10-seat lead – but it translated into a 10-seat loss in November.

Biden’s unpopularity doesn’t help. See their low approval rate of 41% in May, according to Gallup. This compares to an average of 51% at the same time for presidents since WWII. The Chapman formula says that adds up to nine more lost Democratic seats.

Yes, there is good economic growth – Biden’s 2.8% GDP expansion is better than the post-WWII 2.5% average. But this math gives Democrats only one seat.

And a Republican victory in Virginia’s governorship — an election that has proven to be a leading indicator of political fortunes — translates to a six-seat House pickup for Republicans, the source says.

Then consider gas prices — 61% growth in one year versus an average increase of 2.5% annually. That pump pain for Republicans is worth 29 seats — giving them the House later if this Chapman forecast is correct.

You don’t need an economics doctorate to know if people vote with their wallets, pump prices are a clear winner for Republicans. And a psychology degree isn’t needed to understand the emotional response gas prices can create — and voters often work from their hearts out.

For me, though, it will be interesting to see what voters think it is about topics that are difficult to measure. Supreme Court action on reproductive rights or gun control. Or hearings in the January 6 uprising.

I’ll focus on the 1974 midterms when Republicans controlled the White House and lost 48 House seats—the worst midterms since World War II—the second-worst party. By the way, the 50 seats it lost in 1958 to Dwight Eisenhower’s second term was the GOP’s biggest drop.

What was in 1974?

Gas prices jumped 33 percent to 53 cents. The inflation rate stood at 11 per cent. But Richard Nixon also resigned from the presidency. Oh, and it was the first midterm election since the Supreme Court made abortion a right in every state in Roe v. Wade.

sketchy story

Doti tells the story of a recent trip to a Chapman graphic design class.

The students were assigned to draw a political cartoon. Doti was there to provide some economic background highlighting the country’s inflationary challenges.

And what was the subject of the graphic professor’s favorite cartoon from the assignment? A humorous sketch of a gas station where the price was artistically displayed at $18.89 per gallon.

“Bringing it home is the fact that people see it, it’s transparent,” Dotti says of the fuel pump’s political power. “The analysis clearly shows that gas prices affect people’s vote in midterm elections – but not the overall trend in consumer prices.”

‘real’ result

I wondered if real estate matters, politically speaking.

So my trusty spreadsheet was loaded with US price histories from dqydj.com back to 1953. Tracking the last 17 midterms with math is much simpler than Dotty’s analysis, a trend that emerged when I looked at swings in “real” home prices in the 12 months before a midterm election—that’s price change minus inflation.

There were six medium-term years when “real” home values ​​were depreciating.

The list includes massive GOP losses of House seats in 1958 and 1974 – plus 1966 (47 Democratic seats lost), 1990 (lost 8 GOP seats), 1982 (26 GOP seats lost) and 2010 (64 Democratic seats lost). went). Those years of real estate weakness resulted in the loss of an average of 41 seats for the party in the White House.

So what happens when US home prices are rising over a midterm year?

That’s good news for the party in the White House – a loss of only 17 seats on average in the House.

And “real” home values ​​rose 11% over the past year.

Jonathan Lancer is a business columnist for the Southern California Newsgroup. He can be contacted at jlansner@scng.com

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