This week in Bidenomics: The pathway to 4 more years

President Joe Biden is officially running for reelection. Nobody’s excited about an octogenarian second-termer with an underwater approval rating. But Biden may actually enjoy strong odds of a winning second term, due largely to an economy likely to work in his favor.

“Economy favors Democrats in our election model,” Oxford Economics declared in its first assessment of the 2024 election. “An initial run of our US presidential election model suggests that Democrats have the edge over Republicans, with around 55% of the popular vote.”

A presidential candidate needs to win the electoral vote, not the popular vote, but 55% of the popular vote would suggest a commanding Biden win. Biden won 51.3% of the popular vote in 2020, with Donald Trump getting 46.9%. That was enough for Biden to win 306 electoral votes, considerably more than the 270 needed for victory. If Biden racked up 55% of the popular vote, that would likely mean he’d win by a more comfortable margin in close swing states such as Arizona and Georgia, plus maybe pick up an additional state or two, such as North Carolina.

Election models based on the economy don’t measure Republicans against Democrats, per se. They measure the party in power against the party out of power. That’s because incumbents normally have a built-in advantage, given that they’ve already won once and they garner nationwide attention. So the Oxford model, for now, is forecasting four more years for the incumbent Biden, based largely on expectations of where the economy will be in the months prior to Election Day in November 2024.

Americans are in a lousy mood, yet the economy is in better shape than many believe. The labor market is remarkably strong, with the unemployment rate at a mere 3.5%, the lowest since 1969. Biden can rightfully claim that job growth during his presidency has been the strongest of any president on record. That’s partly due to lucky timing, given that Biden took office just as the dramatic post-COVID recovery was launching. But that doesn’t make it untrue.

[Drop Rick Newman a note, follow him on Twitter, or sign up for his newsletter.]

Inflation has been Biden’s biggest economic problem. By Election Day, it might not be, anymore. Inflation has dropped from a peak of 9% last June to 5%, and by most indications it should continue to decline.

Energy prices have moderated as global markets have adapted to Russia’s war in Ukraine. Gasoline prices are down 12% from a year ago and down 28% from the peak of $5 per gallon last June. Rent and food prices remain elevated, but the Federal Reserve’s interest-rate hikes seem to be dinging demand, as intended. Many economists think inflation will be around 3% a year from now, which would be a relief for consumers.

The obvious wild card is the recession some forecasters have been predicting for more than a year, which still hasn’t arrived. There seem to be roughly even odds of a downturn within the next 18 months. Why a recession might happen: The Fed could slow the economy too much, while woes in the banking sector cause a credit crunch that strangles investment and spending. Why a recession might not happen: The Fed will get monetary tightening more or less right, while unfazed consumers with relatively strong finances keep spending enough to keep the economy humming.

Biden could win even if there is a recession, provided it’s mild and over well before Election Day.

“Key to our call that the Democratic party will hold onto the White House in 2024 is that the mild recession we expect later this year will be over by the time the election arrives,” Oxford Economics economist Ryan Sweet argues in the firm’s election forecast. “If the recession hits later than we anticipate, it could reduce the odds of a Democratic victory.”

Those are the economic factors. There are obviously political factors that will help determine who wins, as well. With an approval rating of just 43% or so, Biden’s reelection bid seems weak on the surface. Presidents who have won reelection have typically polled at 45% or better.

But there’s likely to be an X-factor in 2024, just as there was in 2020: Terrible competition. The leading candidate on the Republican side looks most likely to again be Trump, who may be unelectable in a general election. Trump of course lost decisively in 2020, and his endorsements since then have doomed a number of congressional and state-level candidates.

Trump is mired in legal trouble relating to payoff schemes; rape allegations; charges of election fraud; unauthorized possession of classified documents; possible tax evasion in New York; and, finally, his role in the January 6, 2021, riots. In The Atlantic recently, former Republican strategist David Frum predicted “the coming Biden blowout,” arguing that Republicans are “heading for electoral disaster again,” largely because of Trump.

Political scientist Kyle Kondik at the University of Virginia’s Center for Politics says there’s a good chance Biden will “run ahead of his approval rating,” especially if Trump is his opponent. There’s a difference between voters who say they don’t want Biden to run again and the choices voters will make once there are only two mainstream candidates to choose from. Many people who don’t love Biden will still vote for him if the other choice is Trump.

Biden clearly knows this. One of his favorite slogans is “don’t compare me to the almighty, compare me to the alternative.” His first reelection video highlights “MAGA extremists,” the Trump-inspired January 6 riots, and Republican positions that are unpopular with voters, such as abortion bans. Biden won in 2020 as the least-bad choice, and it could be a proven formula that works again.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman

Click here for politics news related to business and money

Read the latest financial and business news from Yahoo Finance