Inflation and job growth could determine the next president.
It’s not whether the nation’s economic performance influences voting, it’s what slice of the economy has the most say.
Personal finances are very personal. The parts of the business world that sway your checkbook might be inconsequential to others.
My trusty spreadsheet looked at seven economic yardsticks — cost of living, hiring pace, gross domestic product, mortgage rates, unemployment, the stock market and wages — seeking any hints as to who will control the White House next year.
The third-quarter performances of these metrics were compared with four years earlier for the last 12 presidential election years, from 2020 back to 1976. Ranking those periods was a modest calculation of the “are you better off than four years ago” question.
To create a historical scale, the 12 presidential terms were divided into thirds for the seven benchmarks. The four best performances were viewed as economic signals that the incumbent party would stay in power. The bottom four outcomes were seen as predictions for a change. The middle third was an “undecided” opinion.
Did those calls prove true? Here’s what I learned, ranked by relative accuracy.
Best bets
The most clairvoyant indicators were inflation and job growth, with their top and bottom outcomes correctly calling control of the White House with 88% accuracy.
For starters, the cost of living is always a hot-button topic. And we’ve been reminded in recent years just how anxious Americans get when inflation skyrockets. When trips to the store get painful to household budgets, voters act accordingly.
But plentiful employment opportunities is also a critical cog for economic well-being. A steady paycheck cures many families’ financial challenges.
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So, if bosses are hiring briskly, voters seem happy to keep the White House in the same hands. But they’ll boot leadership when layoffs are too common.
The next best economic markers for presidential prescience were GDP and mortgage rates, with 75% accuracy.
Now, GDP is a relatively hard-to-explain, broad measurement of business output growth. Still, it’s somehow appreciated by voters who likely appreciate levels of commercial activity without easily quantifying it.
That statistical fuzziness is sharply contrasted by what a home loan costs. Americans like to borrow, and financing costs are a keenly watched factor in life and voting habits.
Next came joblessness, which was correct in 63% of its predictions over 12 years.
On one hand, you’d think the unemployment rate would have vote-altering muscle. On the other hand, most people stay employed even during the darkest of economic downturns.
Unless you or a loved one are out of work, the unemployment factor might not be a vote-changing item.
Poor prognosticators
The stock market was correct on the presidency just half the time during the past dozen elections.
Numerous Americans have insignificant money on Wall Street and don’t follow its gyrations closely. Disinterest or discomfort may be why it’s a somewhat poor predictor of election outcomes.
Finally, there are pay raises. Their movements were correct about elections only 25% of the time since 1976. Now, why wouldn’t voters be …read more
Source:: The Mercury News – Entertainment
