STANFORD, California ¨C As the world splits into rival geopolitical and military blocs, economic ties are fraying and political, military and business leaders worldwide are growing increasingly anxious about America¡¯s presidential election this fall.
As is usually the case, the outcome will be heavily influenced by voters¡¯ perception of economic conditions and the incumbent¡¯s economic policies.
In 1980, a recession and high inflation gave rise to the ¡°misery index¡± (reflecting the inflation rate plus the unemployment rate) and allowed Ronald Reagan to crush the incumbent president, Jimmy Carter. But U.S. Federal Reserve Chair Paul Volcker¡¯s aggressive policies to rein in inflation then caused a deep recession, dooming Republicans to large losses in the 1982 midterm elections. By 1984, however, the annual growth rate had reached 7% and Reagan was handily re-elected.
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