A story that essentially stayed under the radar in recent days was the report from Moody’s Analytics stating that President Donald Trump may pull off a landslide victory next year.
Under baseline economic forecasts, the firm’s “pocketbook model,” which deals with gasoline prices, house prices and real personal income, provides the best outcome for the president.
“If voters were to vote primarily on the basis of their pocketbooks, the president would steamroll the competition, taking home 351 electoral votes to the Democrats’ 187, assuming average voter turnout,” the report said.
Also to be considered is the “stock market model.”
This “is the least favorable model for Trump, though it still currently predicts a victory for the president,” according to the report. “Trump often touts the stock market as a measure of his administration’s economic policy success, and he may be onto something. Even though the stock market can and at times does move up and down independent of what is going on in the economy, the S&P 500 has a statistically significant relationship with voter sentiment in the lead-up to presidential elections.”
The firm’s “baseline forecast” projects annualized growth in real GDP to decline to “multiyear lows” by the end of 2020.
“Because of this growth slowdown, our baseline forecast calls for the richly valued S&P 500 to decline 9% between now and Election Day,” the report said. “This weighs against Trump, but not enough for Democrats to unseat him. The stock market model projects the president will hold on to 289 electoral votes to the Democrats’ 249, again assuming average voter turnout.”
This would result in a smaller margin of victory in the Electoral College compared with 2016.
“If the S&P 500 were to decline by closer to 12% by the third quarter of 2020, the model would instead predict a nail-biting win for Democrats with 279 electoral votes, compared with Republicans’ 259,” according to the report.
And there is also the “unemployment model” to consider. Moody’s reports that the baseline forecast for the unemployment rate across most states is for it to remain near current lows through the first half of next year before rising amid the predicted growth slowdown. Therefore, the “unemployment model” is not as favorable to Trump, but does project a Trump victory of 332 electoral votes to 206, assuming average voter turnout.
However, things get tighter under different turnout assumptions. Under the assumption that the nonincumbent share of turnout in 2020 — that is, Democrats and independents — were to match its historical maximum across all states, only the pocketbook model predicts a victory for Trump. Under such a high-turnout scenario, the Democratic Party nominee would win handily under the stock market model and barely under the unemployment model.
An average of the three sets of model results suggests that if turnout of nonincumbent voters in 2020 matches the historical high across states, then Democrats would win with 279 electoral votes to the president’s 259. Michigan, Wisconsin, Pennsylvania, Virginia, Minnesota and New Hampshire would all flip from Trump’s column versus Moody’s average turnout baseline.