As mentioned before, the 2016 US elections – which according to the betting odds, Donald Trump had just over a 10% chance of winning going into the elections – show it’s pretty hard to forecast who will win. But if you want to make an educated guess, my suggestion would be to focus more on economics and less on betting odds or polls. Today’s chart shows a list of macroeconomic indicators and their relationship to the incumbent party’s popular vote margin. The table shows that the ISM Manufacturing Index and a number of employment-related indicators are most closely linked to the election result. To keep it simple: the better the economy is doing in the period preceding the elections, the higher the probability that the incumbent party will win. From this angle, the chances of Trump being reelected aren’t all that good. While the average ISM Index for this year is marginally above 50, more than 10 million jobs remain lost compared to the start of the year. Unemployment has averaged 8.6% this year and everyone knows what personal income without transfers looks like. Hence, if the economy has anything to say, Donald Trump is unlikely to be reelected.
As a senior portfolio manager I use charts to illustrate financial issues every day. I tweet my favorites as @jsblokland and was named 'one of the 50 most important people for investors to follow in 2018' by MarketWatch.
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