Economic indicators that impact elections

Election day volunteer Vicki Groff places a sign to direct voters to a polling station at Kenilworth School February 28, 2012 in Phoenix, Ariz. What are the big economic indicators that could influence voters one way or another today?

Kai Ryssdal: You can measure economic stuff 'til you're blue in the face -- trust us, we keep track of it all. But if you're not measuring the right stuff, you're doin' it wrong.

Marketplace's David Brancaccio explores the politically relevant economic indicators.

David Brancaccio: Some political scientists call it the "holy grail" -- finding exactly which economic indicators accurately predict who'll become the next president of the United States. But with so many numbers to choose from, finding the right portfolio of possibilities is tough.

Political scientist Douglas Hibbs says, forget more common indicators such as GDP or unemployment. What makes a winner is personal disposable income in America coupled with current American war casualties.  He calls his model "Bread and Peace."

Douglas Hibbs: I probably cribbed it from Lenin.

Lenin's ingredients were bread and circuses. Hibbs says Iraq and Afghanistan won't be much of a drag on President Obama's chances compared to, say, Vietnam.  That leaves growth in disposable income as the decider.

Hibbs: I'm projecting out a growth rate of maybe 2 percent or just under.  I think that's the most likely scenario during this restrained phase of the recovery.  Puts him at a relatively narrow loss to the challenger.

A 52-to-48 loss for Obama is his call, no matter the challenger. But, again, Hibbs' model is just one of many and they can't all be right.

Sean Trende is the Senior Elections Analyst for RealClearPolitics. He says one reason any of these models seem to do OK is because they are tested after the fact, on elections past.

Sean Trende: If the president does win, people will say it is GDP and unemployment.  If he doesn't win, they'll say it's real disposable income. And that's all possible, but there's also a third possibility which is the correlation and not causation and it's really because Rick Santorum or Mitt Romney were terrible candidates and the president did a good job selling his health care bill in the stretch, we don't know.

Let's not forget even a fourth possibility: football. Take the Washington Redskins's last home game before a presidential election, when the Skins lose, the incumbent party tends to lose.

One more indicator for you: there's Intrade, a website where people bet on elections. Today, Intrade gives Mitt Romney a seven out of ten chance of winning. For what it's worth, that site got it right predicting that "The Artist" would win best picture at the Oscars.

In New York, I'm David Brancaccio for Marketplace.

About the author

David Brancaccio is the host of Marketplace Morning Report. Follow David on Twitter @DavidBrancaccio
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CORRECTION - to second mulderc, you misstated Romney's chance of winning the GOP nomination as Romney's chance of becoming President.

Current (Feb 29) InTrade election odds:

Barack Obama to be re-elected President in 2012 - 60.9%
Mitt Romney to be Republican Presidential Nominee in 2012 - 82.7%
Mitt Romney to be elected President in 2012 - 32.1%


Sean Trende is dead-on: All this talk about which indicators predict presidential elections is no better than reading tarot cards. Each metric -- CPI, disposable income, national debt, you name it -- is marginally plausible. If you analyze a list of 1,000 marginally plausible economic metrics, one of them will do a better job than the other 999 of predicting the outcome of past presidential elections. Hindsight is not just 20-20, it's 20-15. Or, as the statisticians say, "Correlation is not causality."
-- Randall Bolten

"Intrade gives Mitt Romney a seven out of ten chance of winning."

No it doesn't, it gives Romney a 28.5% chance of winning and Obama a %61.4 chance of winning. As far as i can tell intrade has never had Romney above a 45% chance of winning the election.

Hibbs was right. "Bread, land, and peace" was a bolshevik slogan, "bread and circuses" is from the Romans.

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