Tags: Economic | model | presidential | race

NYT: Economic Model Shows Presidential Race a Toss-Up

By    |   Monday, 10 September 2012 12:38 PM

An economic model formulated by Yale economist Ray Fair suggests a virtual tie in the U.S. presidential race, matching recent polls.

While the economy’s sluggish growth weighs on President Barack Obama, the fact that it’s expanding at all helps him, Fair tells The New York Times. So does quiescent inflation.

Gross domestic product gained 1.7 percent in this year’s second quarter, and inflation totaled 1.4 percent in the year ended July 31.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

That’s quite a contrast to the nine months preceding Ronald Reagan’s trouncing of Jimmy Carter in the 1980 presidential election. During that period, per capita gross domestic product shrank at a 3.7 percent annual rate, while inflation jumped an annualized 7.9 percent, according to Fair, The Times reports.

“You can quite properly call this economy ‘weak,’” Fair says. “But it’s nothing like what Carter faced.”

His model predicts Romney will beat Obama 50.5 percent to 49.5 percent for the popular vote, well within the poll’s 2.5 percentage-point margin of error.

A couple other economic models show Romney beating Obama more definitively, The Times reports. But the authors of those models discount the results and tab the election as a toss-up for a variety of reasons.

Some analysts look at the influence of the stock market, rather than the economy, on the election outcome.

In 80 percent of presidential elections since 1900, when the Standard & Poor’s 500 Index rose in the three months prior to Election Day, the incumbent won, according to S&P Capital IQ.

Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown

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