A model developed by a historian that has predicted very presidential election since 1984 — including President Donald Trump’s victory in 2016 — now suggests that the path of the economy will determine who wins the White House in November.
The most likely path now leads to a win by Joe Biden, according to the model. But a stronger than expected economic rebound could put re-election within reach for President Trump.
Allan Lichtman, an author and history professor at American University, said in an op-ed video for The New York Times published Wednesday that his 13-factor model now indicates challenger Biden will defeat incumbent Trump. But his model could predict a Trump win if the economic recovery strengthens more than is currently expected in the second half of the year.
“The pollsters and the pundits cover elections as though they were horse races,” Lichtman said in the Times’ video. “But history tells us voters are not fooled by the tricks of the campaign. Voters vote pragmatically according to how well the party holding the White House has governed the country.”
Past performance, of course, does not guarantee future results. The model has a track record of correctly predicting just nine elections, although Lichtman says he back-tested it. And the unprecedented changes in the economy, politics, and society could mean that this year’s results will be particularly unpredictable.
Lichtman’s predictive model looks at thirteen “keys” to the White House, statements that are each marked true or false. True marks boost the chances of an incumbent party’s presidential candidate. False marks boost the chances of a challenger party’s candidate winning. Six or more false marks means the incumbent party loses control of the White House.
One of the statements, for example, asks if the president’s party still has an electoral mandate by looking at the midterm elections. “After the midterm elections, the incumbent party holds more seats in the House than it did after the previous midterm elections,” it reads. That answer gets scored False because Democrats took control of the House in 2018.
Other statements evaluate whether an incumbent is running, if the incumbent had no serious primary challenge, or if there is a lack of a major third party challenge. All of those are scored True —outcomes that are positives for Trump. Trump also garners True marks for lack of a foreign policy crisis, the lack of Biden’s charisma, and enacting major policy changes.
Right now, Lichtman’s model has seven keys that produce a challenger friendly false result — pointing to a win for Biden. In addition to the midterm loss, the factors favoring Biden are False scores for a lack of social unrest, a major military or foreign policy victory, Trump’s charisma, and two statements about economic performance.
“The keys predict that Trump will lose the White House,” Lichtman says.
The truth of falsity of most of the statements are already determined. Trump cannot undo the 2018 election and is powerless to bring to an end the social unrest that has gripped the country. Biden cannot reverse Trump’s tax cuts and probably will not emerge from his basement with previously unseen charisma.
The two statements about the economy, however, could tilt Lichtman’s model towards a Trump victory.
The first is about the short-term economy. “The economy during the election season is not in recession,” the statement says. Lichtman scores that as False. “The pandemic has pushed the economy into recession,” he says.
But the economy likely has already emerged from the recession and will likely have grown at an unprecedented rate in the third quarter. Depending on when the “election season” is defined, that could mean no recession during the election season. It is not clear from Lichtman’s op-ed that he realizes the recession is already over.
The second statement is about the long-term economy: “Real annual per-capita economic growth during the term equals or exceeds mean growth during the two previous terms. “
“The pandemic has caused such negative GDP growth in 2020 that the key has turned false,” Lichtman says.
Prior to this year, this would have been a winning slot for Trump. The mean annual GDP growth during the Obama administration was around 1.6 percent. The mean growth in the first three years of the Trump administration was around 2.5 percent.
If the economy shrinks 6.5 percent this year, as the Fed’s median projection forecast in June, then Trump’s annual economic growth would be a positive 0.275. If the economy recovers a good deal faster than the Fed expects, Trump’s GDP growth could exceed Obama’s—despite the calamity of this year’s first half. To beat Obama’s economic performance, the full year GDP would have to come in no lower than negative 1.3 percent.
This isn’t impossible but it won’t be easy. The economy would have to grow at something like a 25 percent rate in the third quarter to come close. That’s not outside the range of forecasts but it is toward the top end.
Keep in mind that we are already one-month into the July through September third-quarter. So far growth is likely lagging behind that figure, meaning the economy would need to accelerate in the months ahead. The Atlanta Fed’s GDPNow calculation shows economic data for the quarter that is already available putting the U.S. on track for 20.3 percent growth.
That means Republicans will likely have to take aggressive measures to raise the upward pressure on the economy. That might include changing directions on enhanced unemployment, which some Republicans have been seeking to cut, and a new round of direct federal “impact” payments. With millions of Americans losing their jobs each week, millions more without health insurance in a pandemic, businesses pulling back on reopening plans, and many parents struggling to work because school districts are staying closed, no one should expect that economy to accelerate without a major fiscal boost.
So it looks like once again, when it comes to the presidential race, it is the economy, stupid.