Alan Abramowitz has developed conditional forecasts of President Obama’s share of the national popular vote depending on the growth rate of real GDP.
The results show that not only is the election likely to be very close, but the winner of the popular vote may very well depend on the performance of the economy in the second quarter.This morning, Ben Bernanke testified [emphasis added]:
A growth rate of zero or less predicts a narrow popular vote win for Republican challenger Mitt Romney, while a growth rate of 1% or greater predicts a popular vote win for President Obama. The consensus prediction of economic forecasters for real GDP growth in the second quarter is currently about 2.0%. This growth rate would predict a narrow reelection win for President Obama with slightly less than 51% of the major party vote.
The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year. After rising at an annual rate of 2-1/2 percent in the second half of 2011, real gross domestic product (GDP) increased at a 2 percent pace in the first quarter of 2012, and available indicators point to a still-smaller gain in the second quarter.
Conditions in the labor market improved during the latter part of 2011 and early this year, with the unemployment rate falling about a percentage point over that period. However, after running at nearly 200,000 per month during the fourth and first quarters, the average increase in payroll employment shrank to 75,000 per month during the second quarter. Issues related to seasonal adjustment and the unusually warm weather this past winter can account for a part, but only a part, of this loss of momentum in job creation. At the same time, the jobless rate has recently leveled out at just over 8 percent.
Household spending has continued to advance, but recent data indicate a somewhat slower rate of growth in the second quarter. Although declines in energy prices are now providing some support to consumers' purchasing power, households remain concerned about their employment and income prospects and their overall level of confidence remains relatively low.