Unless you are an economist, bond trader, or opinion columnist with far too much time on your hands, you probably know very little (and care even less) about the rotational voting dynamics of the Federal Open Market Committee (FOMC) of the Federal Reserve, the body within America's central bank which oversees our country's monetary policy. The FOMC is comprised of Fed chair Jerome Powell and 11 other individuals who set the highly consequential federal funds rate which determines everything from yields on treasury bonds to the value of the dollar to mortgage rates.
And in 2024, the FOMC is slated to take center stage in the U.S. political calendar.
Powell and 11 other people who most Americans have never heard of might be the ultimate X-factor in determining the outcome of the 2024 elections. They could very well determine who becomes the next president of the United States.
Now please stay awake for the next paragraph. I need to share with you exactly how the voting members of the FOMC are determined, because changes in its composition in 2024 will prove highly consequential.
The FOMC is comprised of 12 voting members including the seven members of the Board of Governors and the president of the Federal Reserve Bank of New York. The other four members are regional Fed presidents who are rotated in and out on a yearly basis. According to most analysts on Wall St., the four outgoing rotating members of the 2023 FOMC were quite "hawkish" when it came to fighting inflation. These were members who were not shy about voting to raise rates when inflation seemed to be spiraling out of control. Their replacements on the 2024 FOMC are of a seemingly much more "dovish" persuasion, concerned more about the impact that higher rates are having on unemployment and families struggling with high rates of borrowing.
This partial changing of the guard at the FOMC is important because with these new dovish members getting a vote on interest rate policy, it's more likely than not that Powell will make good on his recent signaling that the Fed is apt to make as many as three interest rate cuts throughout 2024; moreover, with these new members on board, it's entirely possible that these cuts could go even further than the standard 25 basis points that generally accompany each interest rate reduction. Perhaps a single cut of 50 basis points might be in the mix in 2024. Either way, with a far more dovish FOMC driving economic policy in an election year it's easy to imagine a country that could be in a very different space both economically and emotionally by the time election day rolls around this November.
The country is already on fairly solid footing economically, which historically has been the single most important factor in determining if an incumbent president gets a second term. But you wouldn't know it by looking at President Joe Biden's approval ratings, which recent polls suggest are at an all-time low. Many, including myself, have pinned Biden's low numbers on the quixotic notion of a "vibecession," a data-free malaise that has somehow engulfed public opinion.
If the FOMC votes to start cutting rates in 2024, it will begin doing so because the economy has clearly turned the corner in terms of fighting inflation and has successfully avoided a recession. And a much more buoyant change in public sentiment across the country will not be far behind.
If, on the other hand, the FOMC decides to leave rates unchanged in its first few meetings this year, the signaling effect could be quite the opposite—essentially cementing the notion that a recession is still a real possibility and that Biden is weak on the economy—a move that could tip the scales in favor of Biden's adversary.
Unquestionably, 2024 will already stand alone as an election cycle unlike any other in the modern era. Barring some major Black Swan event, all indications signal a rematch of the 2020 election.
Recent polling suggests that if the election were held today, the presumptive Republican nominee, former President Donald Trump, would likely eke out a victory over Biden, winning a handful a swing states by the narrowest of margins; however, were Trump to be tried and convicted on any of the 91 criminal charges he is facing before Election Day, polls indicate Biden would likely cruise into a second term by a somewhat healthy margin.
But with Trump having found some success in slow-walking his cases using various delay tactics, the chances of Biden getting a TCB, otherwise known as a "Trump Conviction Bump," is looking increasingly remote.
But a more dovish FOMC could more than make up for it.
Arick Wierson is a six-time Emmy Award-winning television producer and served as a senior media and political adviser to former New York City Mayor Michael Bloomberg. He holds a master's degree in economics from UNICAMP, the State University of Campinas in São Paulo, Brazil, and currently advises corporate clients on communications strategies in the United States, Africa, and Latin America.
The views expressed in this article are the writer's own.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Twelve People Who Will Determine the 2024 Presidential Election
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08.01.2024
Unless you are an economist, bond trader, or opinion columnist with far too much time on your hands, you probably know very little (and care even less) about the rotational voting dynamics of the Federal Open Market Committee (FOMC) of the Federal Reserve, the body within America's central bank which oversees our country's monetary policy. The FOMC is comprised of Fed chair Jerome Powell and 11 other individuals who set the highly consequential federal funds rate which determines everything from yields on treasury bonds to the value of the dollar to mortgage rates.
And in 2024, the FOMC is slated to take center stage in the U.S. political calendar.
Powell and 11 other people who most Americans have never heard of might be the ultimate X-factor in determining the outcome of the 2024 elections. They could very well determine who becomes the next president of the United States.
Now please stay awake for the next paragraph. I need to share with you exactly how the voting members of the FOMC are determined, because changes in its composition in 2024 will prove highly consequential.
The FOMC is comprised of 12 voting members including the seven members of the Board of Governors and the president of the Federal Reserve Bank of New York. The other four members are regional Fed presidents who are rotated in and out on a yearly basis.........
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