Wednesday, February 15, 2012

The Key Numbers to Look For An Obama Win or Loss ...

You Might Think a Specific Number Will Determine a Win or Loss, But Our Research Shows It's Not the Number, But the Direction Of It...

    If you know anything about us by now, it's that we are numbers guys.  Nothing will convince us of anything more than to back it up with statistics, all relative to the argument your making.  Two posts ago, we talked about how the economy is moving in the right direction finally, and that was bad news for the Republicans.  Still, 8.3% unemployment would be the highest rate during a presidential election since the Great Depression.  So, that's when the question came to us: what is the point that determines whether an incumbent candidate or party wins or loses?  It started out with one question, but in the end, we got a different answer altogether...

    Like Newton having an apple plop onto his head, welcome to what we think is probably the most important and groundbreaking post of the nearly 3400 we've written... Seriously, we think we have a winner here.  We decided to check on unemployment rates in election years, to determine what they actually were just previous to Election Day, and if there was a break even point between winning and losing. Then we decided for kicks, we'd check and see if there was a trend going up to it.  Thanks to the St. Louis Fed, we got every month from 1948 to 2010 listed. We couldn't have done it without you....

    Not to bore you, but we'll go through the process step by step.. We took the unemployment rates from October of every election year (October because they come out right before Election Day). We then compared that to the unemployment rates from April of the same year. Why April? Because ordinary people don't pay attention to data on the day they come out. No, they have a delay, and their opinions are slower and more delayed. Simply put, they don't get more or less excited about the economy until much later...They just notice that things are better or worse than six months or a year ago. Then we noted whether the incumbent candidate or party won in November. Here is the data:

Year        Unempl. Rate       Change               Win/Loss

1948              3.7%                -.2                           win
1952              3.0                   +.1                                   loss
1956              3.9                   -.1                           win
1960              6.1                   +.9                          loss
1964              5.1                   -.2                           win
1968              3.4                   -.1                           loss
1972              5.6                   -.1                           win
1976              7.7                 no change                  loss
1980              7.5                   +.6                          loss
1984              7.4                   -.3                           win
1988              5.3                   -.1                           win
1992              7.4                  no change                 loss
1996              5.2                   -.4                           win
2000              3.9                   +.1                          loss
2004              5.5                   -.1                           win
2008              6.5                   +1.5                        loss

OK, there are the numbers... The first thing you might think is that there would historically be a point where the American public thinks the economy stinks, and therefore would vote for the other party. Well, there is, to a small degree... That number would be 6%. If you are a Republican, right now you are very, very excited. Don't be.. Yes, 6% is a pretty good number to shoot for, but it is far from foolproof. At 6% or less unemployment, the incumbent candidate or party went 7-3.  At 6% or above, they went 1-5, with the only win being Ronald Reagan in 1984.  In fact, the chances were better at over 7% (1-3) than at between 6% and 7% (0-2).... Pretty solid data, but we have more concrete numbers that will scare the crap out of Republicans.

When we said two posts ago that voters don't change things if they think the country is going in the right direction economically, we just thought it was a feeling, but we had no data to back it up.  The St. Louis Fed data backs that up - completely... Rather than look at the rate, look at the 6 month change in the rate, and how the election turned out.  In the years that unemployment dropped in the 6 months previous to the election, the incumbent party or candidate went an amazing 8-1. If the rate was unchanged or went up, they went a combined 0-7.... Stunned? You should be, and we sure were.  The only loss was 1968, and that makes sense. LBJ declines to run, Bobby Kennedy gets assassinated, Vietnam is tearing the country apart, and the Democrats are left with their third string candidate. Even a 3.4% unemployment rate couldn't save them, as it couldn't in 1952 or 2000...

   You can't underestimate the effect of a trending economy, even small ones.  Most of these declines or advances are small - only three are .6% or higher, but they explain the election much more than the overall rate does.  Look at 1976, '80, '84 and '92.  Ford had 7.7, Carter 7.5, Reagan 7.4 and Bush 41 was at 7.4%.. Yeah three of the four lost, but Reagan's was viewed as a highpoint in America.  Why? Because at it's peak, he had a 10.8% unemployment rate to deal with.  If the overall rate were important, then Al Gore should have landslided into office at 3.9%, nearly HALF Reagan's rate, and 25% lower than Bush 41's election...

   Republicans like to compare 2012 to 1980, but in truth, 1984 may be a more correct comparison.  Both dealt with bad recessions early in their first terms, and approached their re-elections with improving numbers. For Obama to get unemployment down another .9%, and avoid being re-elected with the worst rate in over 70 years would be tough, so we may hit a new high - or low... Time will tell..

    Now, before all Republicans jump off a cliff, here is their one thing to hold onto: it's only February.  The data goes from April to October, so if the economy stalls again later this year, the numbers may reflect a zero change or slight overall increase, and thus an Obama loss is possible.  No, we don't advocate throwing the economy down the crapper to vote in a Republican - we like all Americans to have a job, including us.  

    So, you can throw out the stats about the Redskins winning or losing the game before Election Day, gas prices, or how South Carolina always picks the GOP nominee - that one has already gone down the toilet.  Keep an eye on the unemployment rate. To most of us, it's all that really matters. It's the economy, stupid.. And remember - every tenth of a point counts!



Bobby said...

Well done sir! Can you break down some winning lottery numbers please.

Mike Reino said...

As soon as I figure that out for myself, I'll pass it on... It doesn't seem to be attracting that much attention so far. Maybe it's over people's heads, or it's pissing off Republicans that it's entirely possible that Obama will be re-elected. They don't like bad news...