La economía y la elección presidencial

Weekly Standard:

Yale University economist Ray C. Fair has devised a simple formula by which we can accurately predict the two-party division of the popular vote on the basis of three economic factors: (1) per capita growth of real Gross Domestic Product during the three quarters preceding the election; (2) the growth in inflation during the incumbent’s term; and (3) the number of “good news” quarters during the incumbent’s term in which real GDP grows by more than 3.2 percent. This equation, when applied to elections from 1880 to 2008, yields a remarkably close approximation of the popular vote for president.

In recent months Fair has used his formula to predict the outcome of the 2012 election based upon economic forecasts of inflation and GDP growth in 2011 and 2012. Last November, when forecasts projected growth exceeding 3.5 percent in 2011 and 2012, it predicted a landslide victory for Obama with about 56 percent of the popular vote, up from 53 percent in 2008. When the equations were adjusted in April with somewhat less rosy forecasts, the president’s predicted vote share dropped to 52 percent.

During May and June of this year, forecasters have continued to downgrade their expectations for the economy over the next 18 months. The Wall Street Journal, in its June survey of economists, now forecasts real GDP growth of 2.7 percent in 2011 and 3 percent in 2012, down from February forecasts of 3.5 percent and 4 percent respectively. If these forecasts turn out to be accurate, there will be no more “good news” quarters for Obama between now and the election.

A similar survey released in May by the Federal Reserve Bank of Philadelphia also downgraded earlier forecasts for GDP growth from 3.2 to 2.7 percent in 2011 and from 3.1 to 3 percent in 2012. That survey also adjusted earlier forecasts for inflation upward from 1.7 to 3.1 percent for the rest of 2011 and from 2 to 2.2 percent in 2012. These forecasts were made well before the latest employment reports came out. It is a safe guess that new forecasts based upon second quarter data will be even more pessimistic about future growth.

What happens when we plug these latest numbers into Fair’s equation?

With GDP growth in 2012 at 3 percent (with an adjustment for population growth), inflation increasing moderately (especially in 2011), and no more “good news” quarters (there has been just one so far during his term, in the fourth quarter of 2009), the equation yields Obama 49.1 percent of the two-party popular vote. Current economic forecasts are thus projecting a dead heat in 2012 between President Obama and just about any Republican challenger, with the odds today slightly in favor of the challenger. If economic conditions should deteriorate beyond current forecasts, his chances of reelection would continue to fall accordingly. Notwithstanding the comments by his political adviser, President Obama is now at the mercy of economic conditions over which he has little control.

* Es una proyección preocupante para el Presidente porque el modelo tiende a favorecer al incumbent. En 2004 la última predicción de Ray Fair en base a esos tres factores económicos fue que Bush se haría con el 57,7% del voto popular y superaría los 461 votos electorales.