The slow growth reported for the second quarter is enough to allow President Barack Obama an edge in his re-election bid, according to a forecasting model based on the economy and polling data.
The U.S. economy grew at a 1.5 percent annual rate from April through June, in line with forecasts and slowing from a revised 2.0 percent rate during the first three months of the year, the Commerce Department reported today.
“It puts Obama just barely above the break-even point,” said Alan Abramowitz, a political science professor at Emory University in Atlanta and developer of the forecasting model. “Mainly it tells me we’re heading to a very close election and Obama is a slight favorite.”
Abramowitz said today his model projects Obama will receive 50.5 percent of the popular vote in November and has a two-thirds probability of winning. The model doesn’t project the Electoral College outcome, and it is possible to win the popular vote without an electoral-vote victory, as occurred in the 2000 contest between Al Gore and George W. Bush.
In three-quarters of the 16 presidential elections since World War II, the outcome has been within 1.5 percentage points of this model’s projection, Abramowitz said.
The forecast is based on the initial second-quarter gross domestic product report and the Gallup Poll’s presidential job-approval rating for the last three days of June, when the figure for Obama was 48 percent. Abramowitz uses GDP as a broad measure of the economy and second-quarter data because the political impact of earlier economic performance already is reflected in public opinion polling.
The economy has been the focal point of this year’s presidential campaign. GDP isn’t the only indicator. Obama also is running for re-election at a time of slow job growth, with unemployment holding at over 8 percent for the longest stretch since World War II.
The presidential candidates have struggled to frame public perceptions of the state of the economy.
Republican challenger Mitt Romney stresses the weakness of the recovery in comparison with historical norms, while the Obama White House emphasizes continued progress out of a downturn he inherited from his predecessor that was the worst since the Great Depression. The messaging contest played out again with release of the Commerce Department report today.
Columbia University Business School Dean Glenn Hubbard, a top Romney economic adviser, called the growth rate“quite disappointing.” In a conference call with reporters arranged by Romney’s campaign, Hubbard said the report demonstrates a recovery that “lacks wind and oxygen.”
Alan Krueger, chairman of Obama’s Council of Economic Advisers, said the report shows the economy is moving “in the right direction.” He added in a statement that “additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007.”
A number of election-forecasting models have been developed that attempt to predict presidential election results based on economic data -- either alone or in combination with polls -- though the authors differ on the best economic measures.
Other forecasters have drawn on predictors including income growth, payroll growth, unemployment rate changes, leading economic indicators, stock market performance and consumer confidence. Typically, they concentrate on the trajectory of the economy during the election year, though some also give lesser weight to the economy’s performance earlier in a president’s term.
Abramowitz concentrates on GDP growth because it is “a very broad measure of the performance of the economy that correlates with a lot of other things.”
Third-quarter GDP growth is no better than second-quarter growth as a predictor of an election outcome, and by the time it is available polling data alone is a superior predictor, Abramowitz said. The first estimate of third-quarter growth this year will be released Oct. 26 -- 11 days before the election.
There’s a lag in the time it takes the public to incorporate objective economic data in political perceptions, and late in the campaign there are fewer undecided voters “open to persuasion,” he said.
Strong economic growth historically has helped presidents win re-election, though it hasn’t always been a prerequisite.
Among the seven U.S. presidents returned to office since World War II, GDP growth has averaged 4.7 percent during the first nine months of their re-election year, above the overall 3.2 percent average since quarterly figures first were issued in 1947. So far this year, the average growth rate has been 1.75 percent as Obama approaches the Nov. 6 election.
Ronald Reagan, whose experience with a deep recession early in his term has parallels to challenges Obama confronts, presided over an economy that grew at an average 6.3 percent rate during the first nine months of 1984. As Bill Clinton headed to re-election in 1996, growth averaged 4.5 percent.
Even so, a weak economy hasn’t necessarily meant defeat. Dwight Eisenhower, who like Obama remained personally popular with voters, was re-elected despite a sluggish economy in 1956. GDP grew at an average 0.3 percent annual rate during the first nine months of a year in which Eisenhower won a landslide victory with 57 percent of the vote.
Bush was also re-elected with below-normal growth, averaging 2.8 percent during the first nine months of 2004.
High growth hasn’t always translated into re-election for incumbents.
Two of the three presidents defeated for re-election since World War II lost even with above-average growth during the first three quarters of their election years. Voters rejected Gerald Ford in 1976 with growth averaging 4.8 percent amid discontent over the Watergate scandal and his pardon of predecessor Richard Nixon.
George H.W. Bush was ousted in 1992, though growth averaged 4.3 percent. The public was still angry over the 1990-1991 recession, and the unemployment rate continued to climb through June of the election year.