Voters’ Economic Well-Being

[toomuchtime_]

On his economics blog at Barrons magazine, Gene Epstein created an index — Voters’ Economic Well-Being, or VEWB — to see how elections in the past were impacted by the state of the economy at the time. He combined the percentage increase in consumer spending during the last six months of an election year and the unemployment rate for married males over the same period. The difference is his VEWB index.

Going back to 1956 with Dwight Eisenhower’s reelection, Epstein has not only calculated his index, but compared it to the election outcome. Based on his VEWB, Obama would have lost his bid for reelection if the election had been held last November.

He concluded that “a flat-to-positive index is virtually required for an incumbent to win. Also, no one has ever won with the index as negative as Obama’s is now.” In fact, according to Epstein’s analysis, Obama’s index is worse than any other president seeking reelection, except Jimmy Carter’s. Epstein admits: “The president’s number could turn at least flat or maybe even positive by November, but that’s quite unlikely.”

And now that the price of gasoline is nationally above $4 a gallon and likely headed for $5, consumer spending is about to take another hit. John Hofmeister, a former Shell operations manager and currently CEO of Citizens for Affordable Energy, said this increase “could impact the U.S. recovery. If you turn the clock back one year, we were seeing these prices in February and the economy slowed in May, June and July and it became a grave concern of the administration.”

If Gallup, Epstein and Hofmeister are all correct, then the president’s chances for reelection are in serious and increasing jeopardy.

Unemployment Up in February, Obama Reelection Chances Down

 

[Katzndogz]

Democrats will say that unemployment has dropped another two percentage points and we are in recovery.

 

[toomuchtime_]

Democrats will say that unemployment has dropped another two percentage points and we are in recovery.

It's not about what people say about the economy but how voters experience what is happening in the economy.

 

[007]

Democrats will say that unemployment has dropped another two percentage points and we are in recovery.

And democrats would be lying pieces of shit, and only a total moron would believe them.

 

[Baruch Menachem]

I think Obama is basing his hopes on what he has in opposition

 

[Caroljo]

Democrats will say that unemployment has dropped another two percentage points and we are in recovery.

Because of the people not counted anymore......but they don't see that!

 

[California Girl]

Interestingly, I said much the same in another thread a couple of days ago... and was dismissed by the left. How individuals perceive a 'recovery' is at least as important - if not more important - than any actual data.

In a recovery where the data is strong, the perception of the recovery is also strong. Unfortunately (or fortunately, depending on one's perspective)... that is not the case in 2012.

 

[007]

I think Obama is basing his hopes on what he has in opposition

Wait until it's just one republican and the VP pick running against obama. The fire storm hasn't even begun yet. obama is going to get hit with shock & awe when the campaign against HIM starts.

He doesn't stand a chance.

See my sig line...

 

[007]

Interestingly, I said much the same in another thread a couple of days ago... and was dismissed by the left. How individuals perceive a 'recovery' is at least as important - if not more important - than any actual data.

In a recovery where the data is strong, the perception of the recovery is also strong. Unfortunately (or fortunately, depending on one's perspective)... that is not the case in 2012.

You're right... because until this starts coming down, there is no true recovery.

 

[toomuchtime_]

I think Obama is basing his hopes on what he has in opposition

Obama is basing his hopes on the same thing that won him the 2008 election, outspending his opponent. In the last election, Obama outspent McCain by a ratio of 4 to 1 throughout the campaign and by 5 to 1 during the last month. If the Republicans are able to put together a war chest equal to Obama's this time, any one of the top candidates will have a decent chance of beating him.

 

[ladyliberal]

And yet, even as Obama's chances of reelection are "down", Intrade traders give him over 60% chances of reelection, the highest number in many months. There are a few problems with the numbers the New American cites:

- Gallup's prediction that UE will rise is not seasonally adjusted, and it's not clear that it is worse than previous projections

- Epstein's blog post is about as weak a study as one can find. It includes no citations, very little analysis or statistics, and no review, peer or otherwise. There's nothing wrong with it as blog posts go, but to imagine that it has serious predictive power over and above established models is absurd.

- While some established models do predict that economic variables are so bad that Obama stands little chance, there is every reason to doubt this result. As voters (or swing voters, at least) generally recognize, Obama inherited the worst economy of any incoming president since FDR, and there's no reason to believe that they will hold him accountable for the current economy in the same way.

 

[FireFly]

Democrats took power On January 1, 2007. Look what happened!!!

 

[The T]

Democrats took power On January 1, 2007. Look what happened!!!

For weeks they have been denying it all.

 

[toomuchtime_]

And yet, even as Obama's chances of reelection are "down", Intrade traders give him over 60% chances of reelection, the highest number in many months. There are a few problems with the numbers the New American cites:

- Gallup's prediction that UE will rise is not seasonally adjusted, and it's not clear that it is worse than previous projections

Gallup's poll and the BLS poll normally come up with very similar numbers despite the fact that one is seasonally adjusted and the other isn't. The relevant fact is that Gallup found unemployment up from its last month's poll.

- Epstein's blog post is about as weak a study as one can find. It includes no citations, very little analysis or statistics, and no review, peer or otherwise. There's nothing wrong with it as blog posts go, but to imagine that it has serious predictive power over and above established models is absurd.

Epstein's analysis shows clearly that no incumbent since Eisenhower has been reelected if the rate of increase of consumer spending - a measure of consumer confidence - minus the unemployment rate of married males is negative and that no incumbent other than Jimmy Carter has had as negative a measure as Obama.

Certainly there are other factors that may influence the race, but people make the mistake of thinking Obama is a strong candidate; he is not. He won in 2008 because he outspent McCain by a ratio of 4 to 1 throughout the campaign and by 5 to 1 during the last month of the campaign. If McCain had been able to match Obama's spending, we would now be wondering who the Democrats will run against President McCain. If the Republicans unite behind their candidate and give him a war chest comparable to the billion dollars plus Obama plans to spend, and if voters continue to suffer under the Obama (lack of) economic policies, then any one of the top Republican candidates can defeat him.

- While some established models do predict that economic variables are so bad that Obama stands little chance, there is every reason to doubt this result. As voters (or swing voters, at least) generally recognize, Obama inherited the worst economy of any incoming president since FDR, and there's no reason to believe that they will hold him accountable for the current economy in the same way.

Jimmy Carter also inherited the worst economy since FDR and despite far more courageous and imaginative attempts to right it, when Reagan asked voters if they were better off now than when Carter took office, they held Carter accountable for his failure to "fix" the economy. Obama is not responsible for the economy he inherited but he is responsible for his failure to fix it.

 

[ladyliberal]

And yet, even as Obama's chances of reelection are "down", Intrade traders give him over 60% chances of reelection, the highest number in many months. There are a few problems with the numbers the New American cites:

- Gallup's prediction that UE will rise is not seasonally adjusted, and it's not clear that it is worse than previous projections

Gallup's poll and the BLS poll normally come up with very similar numbers despite the fact that one is seasonally adjusted and the other isn't. The relevant fact is that Gallup found unemployment up from its last month's poll.

- Epstein's blog post is about as weak a study as one can find. It includes no citations, very little analysis or statistics, and no review, peer or otherwise. There's nothing wrong with it as blog posts go, but to imagine that it has serious predictive power over and above established models is absurd.

Epstein's analysis shows clearly that no incumbent since Eisenhower has been reelected if the rate of increase of consumer spending - a measure of consumer confidence - minus the unemployment rate of married males is negative and that no incumbent other than Jimmy Carter has had as negative a measure as Obama.

Certainly there are other factors that may influence the race, but people make the mistake of thinking Obama is a strong candidate; he is not. He won in 2008 because he outspent McCain by a ratio of 4 to 1 throughout the campaign and by 5 to 1 during the last month of the campaign. If McCain had been able to match Obama's spending, we would now be wondering who the Democrats will run against President McCain. If the Republicans unite behind their candidate and give him a war chest comparable to the billion dollars plus Obama plans to spend, and if voters continue to suffer under the Obama (lack of) economic policies, then any one of the top Republican candidates can defeat him.

- While some established models do predict that economic variables are so bad that Obama stands little chance, there is every reason to doubt this result. As voters (or swing voters, at least) generally recognize, Obama inherited the worst economy of any incoming president since FDR, and there's no reason to believe that they will hold him accountable for the current economy in the same way.

Jimmy Carter also inherited the worst economy since FDR and despite far more courageous and imaginative attempts to right it, when Reagan asked voters if they were better off now than when Carter took office, they held Carter accountable for his failure to "fix" the economy. Obama is not responsible for the economy he inherited but he is responsible for his failure to fix it.

The seasonal adjustment is hardly inconsequential. The New American falsely claimed that Gallup projected a rise in non-adjusted unemployment from 8.3% in January to 9.0% in February. In fact, 8.3% was the adjusted number, and Gallup gives 8.6% as the non-adjusted rate in January. Thus, the malicious or accidental confusion indicated a jump 75% larger (.7% rather than .4%) than the actual projection.

Accepting the predictive power of Epstein's model is a a statistical fallacy. It is plausible enough, but the fact is that there are so many economic variables, and so many ways of plausibly choosing them, that it is easy to find plausible models with sharply contradictory results. Nate Silver addresses these issues when he disputes the predictive power of a model that is hundreds of times better developed than Epstein's (and, incidentally, predicts that Obama will win easily) here: Despite Keys, Obama Is No Lock - NYTimes.com. So it is certainly possible that Epstein's model is "correct" in the very narrow sense that it is possible that it might get a single binary variable correct (does Obama win in 2012?) but I remain entirely unconvinced that it has any predictive power over standard models.

Part of the problem is that there is very little data available. Even accepting that the election of 2012 belongs in the same model as the election of 1956, we have only a few data points (and they are binary variables, since Epstein for some reason discards the actual popular vote split). If Epstein's model held for a thousand data points I would be convinced, but it wouldn't and I'm not. Epstein's VEWB, while certainly correlated with elections, does not seem to be a strong predictor.

I agree with you that if the Republican party displays surprising unity and the economy does surprisingly poorly Obama will almost certainly lose, but that is almost universally accepted and has little to do with Epstein's model. I'm less convinced about the value of campaign funds, especially for a sitting president.

 

[The T]

Interestingly, I said much the same in another thread a couple of days ago... and was dismissed by the left. How individuals perceive a 'recovery' is at least as important - if not more important - than any actual data.

In a recovery where the data is strong, the perception of the recovery is also strong. Unfortunately (or fortunately, depending on one's perspective)... that is not the case in 2012.

It has been cited that no President has ever lost when the Stock Market is growing during thier re-election campaigns...

 

[toomuchtime_]

And yet, even as Obama's chances of reelection are "down", Intrade traders give him over 60% chances of reelection, the highest number in many months. There are a few problems with the numbers the New American cites:

- Gallup's prediction that UE will rise is not seasonally adjusted, and it's not clear that it is worse than previous projections

Gallup's poll and the BLS poll normally come up with very similar numbers despite the fact that one is seasonally adjusted and the other isn't. The relevant fact is that Gallup found unemployment up from its last month's poll.



Epstein's analysis shows clearly that no incumbent since Eisenhower has been reelected if the rate of increase of consumer spending - a measure of consumer confidence - minus the unemployment rate of married males is negative and that no incumbent other than Jimmy Carter has had as negative a measure as Obama.

Certainly there are other factors that may influence the race, but people make the mistake of thinking Obama is a strong candidate; he is not. He won in 2008 because he outspent McCain by a ratio of 4 to 1 throughout the campaign and by 5 to 1 during the last month of the campaign. If McCain had been able to match Obama's spending, we would now be wondering who the Democrats will run against President McCain. If the Republicans unite behind their candidate and give him a war chest comparable to the billion dollars plus Obama plans to spend, and if voters continue to suffer under the Obama (lack of) economic policies, then any one of the top Republican candidates can defeat him.

- While some established models do predict that economic variables are so bad that Obama stands little chance, there is every reason to doubt this result. As voters (or swing voters, at least) generally recognize, Obama inherited the worst economy of any incoming president since FDR, and there's no reason to believe that they will hold him accountable for the current economy in the same way.

Jimmy Carter also inherited the worst economy since FDR and despite far more courageous and imaginative attempts to right it, when Reagan asked voters if they were better off now than when Carter took office, they held Carter accountable for his failure to "fix" the economy. Obama is not responsible for the economy he inherited but he is responsible for his failure to fix it.

The seasonal adjustment is hardly inconsequential. The New American falsely claimed that Gallup projected a rise in non-adjusted unemployment from 8.3% in January to 9.0% in February. In fact, 8.3% was the adjusted number, and Gallup gives 8.6% as the non-adjusted rate in January. Thus, the malicious or accidental confusion indicated a jump 75% larger (.7% rather than .4%) than the actual projection.

Accepting the predictive power of Epstein's model is a a statistical fallacy. It is plausible enough, but the fact is that there are so many economic variables, and so many ways of plausibly choosing them, that it is easy to find plausible models with sharply contradictory results. Nate Silver addresses these issues when he disputes the predictive power of a model that is hundreds of times better developed than Epstein's (and, incidentally, predicts that Obama will win easily) here: Despite Keys, Obama Is No Lock - NYTimes.com. So it is certainly possible that Epstein's model is "correct" in the very narrow sense that it is possible that it might get a single binary variable correct (does Obama win in 2012?) but I remain entirely unconvinced that it has any predictive power over standard models.

Part of the problem is that there is very little data available. Even accepting that the election of 2012 belongs in the same model as the election of 1956, we have only a few data points (and they are binary variables, since Epstein for some reason discards the actual popular vote split). If Epstein's model held for a thousand data points I would be convinced, but it wouldn't and I'm not. Epstein's VEWB, while certainly correlated with elections, does not seem to be a strong predictor.

I agree with you that if the Republican party displays surprising unity and the economy does surprisingly poorly Obama will almost certainly lose, but that is almost universally accepted and has little to do with Epstein's model. I'm less convinced about the value of campaign funds, especially for a sitting president.

According to Gallup, the New American report is accurate:

The U.S. unemployment rate, as measured by Gallup without seasonal adjustment, is 9.0% in mid-February, up from 8.6% for January. The mid-month reading normally reflects what the U.S. government reports for the entire month, and is up from 8.3% in mid-January.

U.S. Unemployment Increases in Mid-February

So if Gallup is correct, we can expect to see the government's end of month report for February to show about 9% unemployment.

Epstein's analysis has the advantage of being completely objective and intuitive, whereas the scale from your link is just downright silly in that so may of the points on which it bases its analysis are subjective and depending on the spin you give to them can be either positive or negative: it is a scam. For example, what constitutes a foreign policy success or failure? It depends on who you ask. We can probably all agree that killing Obl was very satisfying, and in that sense it was a foreign policy success, but the clumsy way it was handled by the administration has led to a sharp and probably lasting deterioration in our relations with Pakistan, and in that sense it was a very costly failure.

While the scale you seem to admire is based on static conditions many of which are highly subjective, Epstein's analysis is not only completely objective but also provides a dynamic analysis of conditions during the six months leading up to the election when voters are making their decisions. Instead of just looking at the level of unemployment during this period, it looks at the rate of change of unemployment and instead of just looking at the level of consumer spending, a measure of consumer confidence, it looks at the rate of change of consumer spending, allowing that even in tough economic times, if conditions are seen by voters as improving, the incumbent can be reelected, but showing clearly that if voters see conditions worsening, he can't be reelected.

This is bad news for Obama because the economy will almost certainly continue to worsen in the months leading up to the election because of increasing fuel prices due to Obama's failure to deal effectively with Iran's nuclear weapons and long range missile programs, a colossal foreign policy failure. Higher fuel prices mean lower consumer spending, a higher cost of living and higher unemployment. A few weeks ago, analysts were predicting $4 a gallon gas prices by summer and now they are starting to talk about $4.50 or $5.00 a gallon prices by election time.

Obama outspent McCain by a ratio or 4 to 1 throughout the campaign and a ratio of 5 to 1 during the final month. It is ridiculous to think the huge difference in campaign spending did not profoundly effect the outcome of the 2008 election. Had Obama accepted public funding as McCain did, there is little doubt that McCain would have won the election. David Axelrod and David Plouffe literally bought the WH for Obama by raising so much money.