Democrats seem thrilled now that Vice President Kamala Harris has replaced Joe Biden as their likely presidential nominee. Donations are pouring in, endorsements are piling up, and it’s now Republicans, not Democrats, who have to grapple with an elderly presidential nominee.

This fresh start for Democrats, however, doesn’t alleviate a problem Harris inherits from Biden: Voters associate the Biden administration and Democrats in general with the high inflation of the last two years.

And there’s no easy way for Harris to wash her hands of it.

Forecasting firm Oxford Economics updated its election forecast after Biden dropped out of the race, and found that economic factors still favor Republican nominee Donald Trump. “We still think that swing voters will vote on pocketbook issues, namely their perception of inflation,” economist Bernard Yaros wrote in the July 22 analysis. “The vice president will likely drive renewed enthusiasm and attract greater fundraising, but for now, she still seems to carry the same baggage as Biden. Former President Donald Trump is still the favorite to win.”

Oxford bases its election model on approval ratings for the incumbent—which applies to Biden and Harris both—and on economic factors in the swing states likely to determine who wins in November. Inflation has dropped sharply from its recent peak, which was 9% in 2022. It’s now at 3%, which is close to normal levels. But most of the price hikes of the last two years are still there, raising price levels for staples such as food on a more or less permanent basis.

The Oxford analysis includes three scenarios for how voters think about inflation when choosing whom to vote for. In the “sticker shock” model, voters focus on cumulative price changes during the Biden-Harris administration—which is bearish for Democrats. In that model, the Republican challenger would win Pennsylvania, Wisconsin and other key sting states, more than enough cushion to clinch an electoral college victory.

If voters focus instead on the rate of change in prices, that favors Democrats, since they’d get credit for the sharp drop in inflation. In that scenario, Harris wins Pennsylvania, Michigan, Wisconsin, and Arizona and narrowly lands the presidency.

The best scenario for Harris would be if voters focus on real earnings. Incomes, adjusted for inflation, fell for most of 2022. But they turned positive again in 2023, and since then Americans have been regaining lost purchasing power. If that’s how voters think about inflation, Harris wins by a bit more than if voters are thinking about inflation rates.

Harris has only recently earned enough delegate support to clinch the nomination, which won’t be official until the Democratic convention that starts August 19. She hasn’t yet had much of a chance to distinguish herself from Biden on inflation or the other key weakness for Democrats—immigration—and test fresh messaging that might give her an edge.

That’s why most forecasts still cast Trump as the election favorite. The University of Virginia’s Center for Politics currently assigns Trump 251 electoral votes and Harris 226, with 61 tossups. That’s the same as when Biden was still running. Betting markets give Trump 58% odds of winning a second term, while Harris’s odds are 33%. As recently as April, Biden and Trump were even. So the Democrats’ position has deteriorated during the last three months, even with the switch to Harris.

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But the economy and other factors are likely to go Harris’s way during the home stretch of the election, giving her a fighting chance to overtake Trump. Most economists think inflation has receded enough for the Federal Reserve to start cutting interest rates in September. If there’s one rate cut before Election Day, it won’t be a windfall for borrowers, but it will signal easier money is on the way and perhaps boost confidence. Stock markets are already levitating near record highs on the hopeful outlook for lower inflation and falling interest rates.

The Biden administration has also arrested its other festering problem, migration flows at the southwest border. Biden took action in June that has pushed border crossing to the lowest level since January 2021, the month he took office. It seems certain those new policies will stay in place at least through the election.

That won’t erase all voter perceptions of Democrats being weak on immigration. But it has already slashed the volume of headlines about migrants overrunning American communities, which should be a modest win for Harris. Whether she can turn favorable trends into an electoral win is now largely up to her.

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

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