Through an Economic Lens, an Election Too Close to Call

The common thesis in the presidential race right now is one of three beliefs which are;

1. The economy improves and President Obama retains his position
2. The economy declines and Mitt Romney the assumed GOP candidate wins
3. The Economy muddles along which may improve Romney's chances but results in one of the tightest presidential elections of all time

I am personally n the camp that the economy declines or at best muddles along.  But putting economics aside who would be the best president given the current issues for the long-term or at least the next 4 years?  no candidate is perfect so it comes down to choosing the lessor of two evils to some degree.


In this NYT piece Through an Economic Lens, en Election Too Close to Call, the writer Jeff Sommer puts the economic scenarios/thesis to test with a few scholars.  Below are the bullet points from the article;

• If the economy surges, he’s likely to win. If it lurches into a recession, he will quite probably lose. And if it simply muddles along at a sluggish pace, more or less as it has been doing for months now, the election could easily be a photo finish.  Those are the latest projections of Ray C. Fair, the Yale economics professor who has been studying the economy’s effect on American elections for decades.
• His current calculations, which he shared with me last week, showPresident Obama with 50.17 percent of the vote, giving him a margin so small that it falls within the 2.5 percent “standard error” of the equations. “That means it’s too close to call,” Professor Fair says.
• On his Web site, fairmodel.econ.yale.edu, he maintains models of the economy and of its effects on presidential and Congressional elections. There are even do-it-yourself modules that let you plug in your own assumptions about the economy. The site will crunch those numbersfor you and issue fresh predictions about the 2012 election.
• “I’m not attempting to do the job of a political scientist,” Professor Fair says. “I’m just assuming that there’s a historical regularity in the effect of the economy on how people vote, and I’m trying, through the use of econometrics, to estimate what that regularity is, and to use it to make a prediction.”
• Nigel Gault, the chief United States economist at IHS Global Insights, a Boston research firm, says IHS’s projections, using proprietary methods and different economic variables, show the president facing a tough battle. Mr. Gault has a bleaker “baseline” forecast — 1.25 percent per capita real income growth for the 12 months leading up to the election, and unemployment of 8.8 percent on Election Day. That would produce an apparent Republican victory, he says.
• “Our model suggests that it will be very difficult for Mr. Obama to win,” he says. A more “optimistic scenario” — one with a 15 percent probability, in the IHS model — shows the president with only 48 percent of the popular vote, making the election too close to call. A “pessimistic scenario,” with a recession in the United States most likely set off by shocks from Europe, gives the Republicans a landslide victory; the firm assigns a 30 percent probability to this outcome.