What do you think about inflation? Like, really?

Most Americans believe inflation is too high. But different people think about inflation in different ways, and these quirks of human psychology could end up determining the outcome of this year’s presidential election.

Inflation is obviously a big concern of voters. The annual inflation rate peaked at 9% in 2022 and has steadily declined to 2.4%, which is close to normal. But prices have risen a cumulative 20 percent since President Joe Biden took office, while incomes have risen just 18.1 percent. During Biden’s presidency, the typical worker has fallen slightly behind.

When Donald Trump was president, the total price increase in October of the fourth year was only 7.6%. Revenue in the same time frame increased by 13.5%. So the typical worker went ahead. This is the most concise way to explain why some voters think the economy has been better under Trump.

This matters now, as voters must decide whether they would be better off for the next four years under Trump or Vice President Kamala Harris, who by association carries the baggage of Biden’s inflation hike. And it could all depend on how a small number of swing voters in seven swing states view inflation.

Read more: Trump vs. Harris: 4 ways the next president could hurt your bank accounts

Forecasting firm Oxford Economics runs an election model based on economic conditions in each state and patterns from past elections. A stable and growing economy like we have now is normally bullish for the incumbent party, in this case Kamala Harris’s Democrats. But inflation is a bent wheel that blocks the electoral machinery.

Oxford accounts for inflation in two ways. One is a “sticker shock” model, where voters are still feeling the sting of cumulative price increases over the past three years. In this model, Trump wins six of the seven swing states — Georgia, North Carolina, Pennsylvania, Wisconsin, Arizona and Nevada — while Harris wins just one, Michigan. Trump wins the presidency with 297 electoral votes.

The other model is based on the “misery index,” or the sum of unemployment and inflation rates. The current misery index of 6.5 is low by historical standards, as the current rates of inflation (2.4%) and unemployment (4.1%) are both in the green. The misery index has averaged 9.2 since 1948 and 8.3 since 2000. At the same point in Trump’s presidency, the misery index was 8. So by that measure, Biden’s economy is doing slightly better than Trump’s a month before the election.

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In the Oxford Misery Index model, Harris wins North Carolina, Pennsylvania, Michigan, Wisconsin and Arizona, sweeping her by 281 electoral votes. In each result, the race is remarkably close, with the vote in Pennsylvania and Wisconsin decided by 0.3 percentage points or less.

Which model applies? Who knows. “It is difficult, if not impossible, to know which model will most accurately capture the degree of voter dissatisfaction,” Oxford acknowledged. The misery index model has better historical results, but the sticker-shock model probably applies better to the millions of lower-income voters.

Other electoral models provide little additional clarity. Election tracker Moody’s Analytics is an underdog, with a marginal lead over Harris due to lower gas prices and a slight drop in mortgage rates. The RealClearPolitics polling average is statistically related. Betting markets favor Trump, but these are not the same as polls and may overstate Trump’s chances of winning.

There is a logical fallacy implicit in the huge role inflation plays in the 2024 election: past performance has nothing to do with future results. Trump has done nothing special during his presidency to keep inflation low. He simply came into office at the end of a long period of disinflation that ended with the 2020 COVID pandemic and massive amounts of stimulus spending approved by both political parties. Biden did nothing unusual to make inflation worse, except sign the fourth of the big four stimulus bills into law.

There is also irony. Trump’s plan to slap new tariffs on more than $3 trillion worth of imports is inherently inflationary because tariffs are a tax that raises prices. That is why many economists believe inflation would be higher under Trump than under Harris. Team Biden, by contrast, has been so politically damaged by inflation that Harris and other Democrats may be instinctively reprogrammed to make sure they never threaten them again. If they have the chance.

Rick Newman is a senior columnist for Yahoo Finance. Follow X at @rickjnewman.

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