Election Expectations: Will the Economy Factor In?

Elections Expectations: Will the Economy Factor In?

With the last 2016 presidential debate behind us, voters will soon weigh a variety of issues in deciding how they cast their ballots. It’s the economy, however, that Americans are most concerned with as they go to the polls.

How could the focus on economic conditions affect the outcome? Past behavior can be a helpful predictor of future behavior. To that end, we collected basic data and trends leading up to each of the last nine presidential elections. There are certainly more circumstances that contributed to the result of each race, but we concentrated on economic factors associated with all presidential races since 1980.

Election Outcomes

Election Expectations: Will the Economy Weigh In?

Arrows indicate the recent trend in the statistic over the period on which the average is based: Color coding
  • Upward arrow = Increasing
  • Downward arrow = Decreasing
  • No arrow = Steady
  • Green = Favorable
  • Black = Moderate/Neutral
  • Red = Poor

Key Indicator Predictions

Overall, the Obama administration’s 2016 numbers are stable. And with the exception of the current real gross domestic product (GDP) growth, which is only 1.0%, the broader macroeconomic metrics are at positive or neutral levels. (Note: 2016 data for Obama are based on most recent values for each statistic.)

Economic growth

The table shows the average rate of real annual GDP growth in the three quarters of the year leading up to each election. With the exception of Ronald Reagan in 1984, a downward trend in GDP has been associated with an election loss for the party in power.


We show the 12-month average rate of inflation, as measured by the Consumer Price Index (CPI), for the 10 months leading up to each election. At 1.1%, the current rate of inflation is holding steady and is the lowest in a presidential election year dating back to 1980.


This is the average rate of civilian unemployment during the 10 months leading up to the election; the rate is currently at 4.9% and is holding steady. Additionally, this figure is at the second-lowest reading going into an election over the past three and a half decades.

Consumer sentiment*

This number shows the average consumer sentiment, as measured by the University of Michigan, for the five months leading up to the election. The current index level is 92, which we consider a favorable level.

With the outcome of this year’s election only weeks away, some investors might consider making changes to their portfolio, depending on which candidate is elected. While a Clinton or Trump presidency could lead to different legislative and fiscal approaches, it’s more important to focus on your individual investment plan.

Take a deeper look with CIO Scott Wittman to see why making investment decisions based on the elections is essentially a market-timing strategy.

1. Real GDP Growth figures are the annualized rates averaged over the first three quarters of the election year.
2. Inflation Rate is based on the 12-month change in Consumer Price Index and is an average of the first 10 months (January through October) of the election year.
3. Civilian Unemployment Rate is an average of the first 10 months (January through October) of the election year.
4. Consumer Sentiment is based on the index from the University of Michigan’s “Surveys of Consumers” and is the average of the last five months prior to the election (June through October).
5. Color codes (general): Green=Favorable; Black=Moderate/Neutral; Red=Poor.
6. Arrows indicate trend in statistic shown over the period on which the average is based on: upward arrow (increasing); downward arrow (decreasing); no arrow (steady).
7. Color codes combined with arrows indicate whether the trend indicated is favorable (blue) or poor (red).
8. Color codes for Real GDP Growth: 4.0% or higher (green), 1.0% or less (red) and 1.1% to 3.9% (black).
9. Color codes for Inflation Rate: 5% or higher (red), 3% or less (green), 3.1% to 4.9% (black).
10. Color codes for Unemployment Rate: 4.0% or less (green), 7% or higher (red), 4.1% to 6.9% (black).
11. Color codes for Consumer Sentiment Index: 90 or higher (green), 70 or less (red), 71 to 89 (black).
12. Data for Obama are based on most recent values for each statistic and trend since the beginning of each year.

*The Consumer Sentiment Index, from the University of Michigan’s Surveys of Consumers, gauges how consumers feel the economic environment will change and measures consumer attitudes and expectations about the U.S. economy.