How the U.S. Economy will Impact the Presidential Election
By Walter Kurtz, Sober Look
It’s “the economy, stupid” were the words used by James Carville, Bill Clinton’s campaign strategist. The strategy allowed the Clinton campaign to take advantage of the post-Gulf-War recession to defeat George Bush Sr. The question remains whether the current difficult economic conditions will deliver the same outcome for President Obama.
Here are some interesting data compiled by Credit Suisse that looks at previous incumbent presidents running for their second term. In each case the comparison is made between specific economic indicators during a president’s tenure and the votes the incumbent was able to win in the general elections. Let’s look at the good, the bad, and the ugly of the US economic indicators during the past 4 years and what those indicators were for the previous incumbents.
1. The good: both US inflation gauge and the change in the unemployment rate will work to President’s advantage.
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| Source: Credit Suisse |
2. The bad: consumer sentiment (University of Michigan expectations) and the level of unemployment rate puts Mr. Obama with the losing group of incumbents.
3. The ugly: the average GDP growth makes the past period truly stand out.
Clearly this and other indicators are not necessarily the result of who was in the White House in the past four years (though there is some lively debate about that). But what this tells us is that there is a significant relationship between economic conditions and the incumbent’s ability to win the second term. That’s why there is a correlation between the equity markets and Obama’s odds on Intrade for example. The state of the economy in the next few months will likely decide the next US president.
Credit Suisse: “Weak GDP growth and high unemployment pose significant headwinds to the current incumbent. To overcome them, history suggests that unemployment would need to keep trending down and sentiment would need to strengthen prior to the election.”
4 Comments
Obama will still win. Romney doesn’t have a chance.
Unfortunately, you are right. Obama is a hungry incumbent who is willing to shamelessly use all the powers of office to buy off enough interest groups to win, one at a time. In contrast, Carter was hapless, and appeared in stupid sweaters telling us to turn down the thermostat, a thyroid operation knocked the vitality out of Bush Sr., and Ford was a caretaker who had to run only 2 years after the Nixon resignation.
Very interresting.
Does it still make sense to compare Obama with past presidencies since the campaign contribution laws and information technology have changed so dramatically?
I guess we will find out in a few months.
If Gore knew how to give a speech, or had one iota of personality, he’d have won in a landslide. I predicted Obama was going to win after listening to my first full length speech of his. Reagan and Clinton won for similar reasons. So my prediction this time comes down to the debates. I believe Obama can clean Romney’s clock, but if Romney surprises, and Obama screws up, then Romney will win. The only way these economic indicators turn eloquence on it’s head is if they are extreme…. and the improvement in UE and the stock market isnt a friend to Romney now, nor the fact that his only platform is “I’m not him” despite formerly holding so many of the same positions. For example, he was for the stimulus before he was against it, he was (and probably still is) a Keynesian, and of course the health care law he hates so much is his own