|Presidential Vote Equation--July 31, 2000|
Given the latest NIPA data, there are 8 quarters from
1997:1 on in which the per capita real growth rate has exceeded 3.2 percent:
1997:1, 1997:2, 1998:1, 1998:4, 1999:3, 1999:4, 2000:1, and 2000:2.
There are thus 8 good
news quarters so far that are relevant for the 2000 election.
Given the actual data through 2000:2 and the
July 31, 2000, US model forecast, the predicted values of
p15, n, and g3 are 1.8 percent, 8, and 3.6
percent, respectively. (2000:3 is not predicted to be a good news quarter.)
Using these values and the estimated vote equation,
the predicted value for V is .508.
The election is thus predicted to be very close, with a slight edge for the
Some people ask with the economy as good as it is why isn't the equation predicting a bigger Democratic victory. The duration variable is working against the Democrats, and there is no person advantage since the incumbent President is not running again. In addition, there is a slight historical bias in favor of the Republicans. The Democrats thus start off behind, and it takes a strong economy for them to win. The economy is predicted to be fairly strong, but it is by no means the strongest in history. According to the equation it is just strong enough to have the Democrats squeak by, but given the standard error of the equation of 2.1 percentage points, the election is essentially predicted to be a toss up. The one event that would make the election not close is if the stock market crashs and the economy goes into a recession by election time. Time is, however, running out for this to happen, and so as of this writing the election is predicted to be very close.