It's The Economy, Stupid-- And A Woefully Unpopular President

The famous catch phrase, "It's the Economy Stupid", coined by Clinton campaign strategist James Carville in 1992, appears to still be prescient today. Dr. Alan Abramowitz, Professor of Political Science at Emory University, has developed an excellent analysis of long-term national election results. His prediction model appears to provide a very accurate forecast of Presidential Election results. His statistical analysis has found that three indicators of the national political climate have accurately predicted the outcomes of presidential elections since the end of World War II:

1. incumbent president's approval rating at mid-year
2. growth rate of the economy during the second quarter of the election year
3. length of time the president's party has held the White House.

The higher the president's approval rating and the stronger the growth rate of the economy, the more likely it is that the president's party will be victorious. However, if the president's party has controlled the White House for two terms or longer, it is less likely to be successful. Time-for-change sentiment seems to increase after eight years regardless of the president's popularity or the state of the economy.

These three factors can be combined to produce an Electoral Barometer score that measures the overall national political climate. The formula for computing this score is simply the president's net approval rating (approval minus disapproval) in the Gallup Poll plus five times the annual growth rate of real GDP minus 25 if the president's party has held the White House for two terms or longer. Mathematically, this formula can be written as:

EB = NAR + (5 x GDP) - 25

EB= Electoral Barometer score
NAR= Presidential Net Approval Rating
GDP= Annual Growth Rate of Gross Domestic Product

I wanted to dig a little deeper into this model. To help visualize his model, I have developed a linear regression model for the Electoral Barometer (EB) score versus the popular vote margin for the incumbent president party's candidate, based on Prof. Alan Abramowitz data set. His data set covered all the Presidential Elections from 1948 to 2004.

See Chart

The strength of this prediction model (how actual voting results data fits the prediction score) is measured by the Coefficient of Determination (R-Squared ) This model produced an R-Squared value of .903 indicates that 90.3% of the variation in the popular vote margin is related to the changes in the EB score. This indicates a very strong predictive model.

Which brings us to our current situation... from Dr. Abramowitz's calculations,

Using data from late June,

1. President Bush's net approval rating in the most recent Gallup Poll = minus 40%,
2. Annual GDP growth rate of the economy Q2 2008 = plus 0.4 % (estimated),
yields a current "Electoral Barometer" calculated score of "negative 63".

Using my regression model, this predicts a popular vote margin of negative 13.75%, meaning that John McCain could lose to Barack Obama by almost 14%. While it may not seem "highly probable", it certainly is "possible" based on historical patterns.

Recent survey data seems to be trending in this directions. See SuperTracker at FiveThirtyEight.com. Although a possible outlier, recent Newsweek poll gives an early indicator of the potential magnitude of voter sentiment.

Other factors would likely close a significant portion of this gap, however this Barometer is fundamentally predicting some very bad weather ahead for the Republican Party.

While a majority of state electoral votes determine the winner, this popular vote prediction model gives us glimpse, maybe some insight, into the underlying will of the voters, by looking past the individual characteristics of the current candidates.

Abramowitz sums it all up,

"... it appears very likely that the Republican Party is dealing with the dreaded "triple whammy" in 2008: an unpopular president, a weak economy, and a second term election. "

"The current national political climate is one of the worst for the party in power since the end of World War II. No candidate running in such an unfavorable political environment - Republican or Democrat - has ever been successful. If John McCain manages to overcome the triple whammy of an unpopular president, a weak economy, and a second term election, it will be an upset of unprecedented magnitude."

Comments

[JennyJay]

"upset of unprecedented magnitude"
Ahhhhhh - music to my ears. Lets hope that "upset" will apply to Congress and the Senate also.

[EdKate2008]

Great analysis Riley!!! You are absolutely correct. McCain has NO chance. Anyone who says different in the press is just trying to create a story.

[theguruofreason]

You have to factor in the evangelical right who will vote for whoever they're told to vote for without reading the daily paper. They constitute approximately 1/8-1/5 of our country.

[nightwind928]

These are anxious economic times for not only Americans but the world as well. Yesterday Siemens (a German company) announced a cut of over 16THOUSAND jobs. Many retailers in America are closing doors on stores and restructuring in an attempt to stay financially alive in todays falling economy.There is no light showing on the housing market despite the Pollyana attituted of some financial "experts". Much of the problem can be attributed to rising oil prices but not all. We are a country of consumers and we have had to learn harsh lessons about consumption and excess. We can no longer afford to own a house beyond our means or drive a tank sized S U V to the mall everyday. We produce almost no goods in America today and sell mostly services to each other. Mc Cain offers no solution but Obama doesn't either. That's because NO president can offer the panacea that Americans expect to be delivered by the next president. It's going to get worse too and if Iran blocks oil to the Western world, a lot worse. No Republican or Democrat has a magic wand to make this all go away. The horse is already out of the barn.