Economic conditions determine the outcome of most elections, or at the very least, have a huge influence on how people vote.
If you’ve had to shut down your business, are unemployed, or are struggling to make ends meet, you are unlikely to vote for the ruling party, blaming them for the pain that has been inflicted.
But it doesn’t even have to be that personal.
Many voters are often influenced by the overall performance of the economy. They will reward a government that presides over strong and sustained growth, a decent level of job creation, an increase in living standards and a government that manages the budget in a sustainable and responsible manner.
That brings us to the looming federal election, which Prime Minister Scott Morrison is likely to call for Saturday, May 21, 2022.
The flow of economic data will continue to unfold until then as political parties move into campaign mode.
As this political politics occurs, there is always a risk that a shock reading on the economy or a far-reaching policy change will influence at least some voters.
Who can forget the devastating blow to the Howard government in November 2007 when, in the face of rapidly accelerating inflation, the RBA raised interest rates to 6.75% during the election campaign and just 17 days before dawn. of the poll?
While this economic event did not necessarily change the outcome of the election, it likely prompted a significant number of impressionable voters – the most likely mortgage holders – to shy away from the Liberal Party.
What does the 2022 electoral campaign have in store for us?
In terms of monetary policy, the RBA has suggested that interest rates will be held until 2023 or even 2024.
This is despite escalating inflation globally and to some extent here in Australia.
Investors are largely ignoring the RBA guidance, with the futures market price having an approximately 50% chance of an interest increase to 0.25% at the RBA board meeting on May 3 and a 1.5% cash rate by mid-2023.
In the past, the RBA quickly changed its view of the economy and adapted its policy accordingly.
Given the dynamics of inflation over the past few months, there is a real possibility that inflation, wage growth and general labor market conditions will be strong enough to force the RBA to change rates ahead of time. the May poll.
In terms of specific data points, the quarterly Consumer Price Index, which includes details of the various measures of inflation, will be released on January 27 and April 27, the latter being a week before the May meeting of the RBA.
If inflation continues to accelerate – and it is very likely that some of the high inflation seen internationally will be reflected in Australian data – the RBA will be under some pressure to rise.
As for wages, half-yearly average weekly earnings data is released on February 24, while the hugely influential Quarterly Wage Price Index (WPI) is released on February 23 and May 18.
The WPI will serve as an illustration for the general wage debate and a further increase in wage growth could influence the RBA.
Labor force figures will continue to be published monthly and the post-containment recovery in employment and the unemployment rate will be a vital benchmark for economic management.
The numbers should be “good” given the upsurge in job vacancies and advertisements. The key dates for monthly labor force data will be February 17, March 17 and April 14.
Strong employment data, if that’s what we see, will be highlighted by the government as a sign of its prowess in economic management.
There are rumors that the government will present the annual budget in March, in which it can present some electoral softeners to voters. He will also give the latest news on the budget deficit and the level of public debt – issues that can still impact voter sentiment.
That said, the budget deficit is certain to be large – around $ 50 billion a year – and the Treasury will confirm that the public debt will be on track to exceed $ 1,000 billion.
The Treasury and Finance departments will have to publish the pre-election budget outlook a few weeks before election day. This will update the budget, even if it is only a few weeks old.
Overall, there will be plenty of sensitive and potentially influential economic news coming out as Election Day approaches.
These data points will have an increasing likelihood of influencing the outcome of the election, with good news helping the Coalition and any bad news undermining their credentials for re-election.